”a place to be report_hemtex_2019.pdf · 4 5 introduction introduction we believe in cooperation...

”A place to be”

SUSTAINABILITY REPORT 2019

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INTRODUCTION

INNEHÅLL

Hemtex supports the UNs global sustainability agenda goals and uses them to govern and inspire the company’s sustainability agenda.

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Slightly more than nine out of ten (96 per cent) of Hemtex’s cotton products are manufactured from more sustainable cotton.

13ABOUT THE SUSTAINABILITY REPORT The sustainability report is one of the tools that Hemtex uses to communicate with the outside world about how its sustainability work is carried out and developed. An annual environmental and sustainability report has been published by the company since 2010. The report covers the Hemtex financial year, and this report includes the period from 1 January 2019 to 31 December 2019. The previous report was published in March 2019. This sustainability report has been prepared in accordance with the GRI Standards (Core option). Hemtex’s sustainability report has also been prepared with the aim of demonstrating how the company is working towards the material principles of the UN Global Compact (UNGC) and the UN’s Sustainable Development Goals. The report is not audited by external auditors.

THIS IS HEMTEX

Hemtex is the Nordic region’s leading retail chain for home textiles. The company offers an affordable and practical range of interior decoration products. Passion for sustainable textiles characterises everything we do, and products are

manufactured with care for the environment, health, safety and working conditions. Hemtex is a well-known and respected brand that will continue to be developed and managed responsibly and for the long term.

Hemtex’s head office is in Borås, Sweden, and it has stores in Sweden, Finland and Estonia. Most of the stores are wholly owned, with the exception of 12 franchise stores in Sweden. Through collaboration with ICA Global Sourcing (IGS), Hemtex also has a number of purchasing offices in Asia. In May 2019 Hemtex, which was previously part of the ICA Group, was acquired by the listed Norwegian company Kid ASA.

HEMTEX FACTS

Number of employees: 703

Turnover 1 097 Mkr- Finland 94 Mkr- Estonia 29 Mkr- Sweden 973 Mkr

MISSION

HEMTEX DESIGNS AND SELLS INTERIOR DECORATION WITH INSPIRATION, QUALITY AND SERVICE AT A SURPRISINGLY AFFORDABLE PRICE.

INTRODUCTION.................................3 SUSTAINABILITY FOR HEMTEX.....7 OUR VALUE CHAIN

PRODUCT DEVELOPMENT............12 MANUFACTURING...........................16 TRANSPORTATION.........................23 STORES AND SALES .....................26 PRODUCT USAGE............................31

EMPLOYEES.....................................34 GOVERNANCE OF SUSTAINABILITY...................................38 GRI INDEX.........................................47

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Number of stores: 135

- Sverige 119 of which 12 are franchises - Finland 11- Estonia 5 Online shopping in 2 countries

1.8 million club members

In May 2019 Hemtex, which was previously part of the ICA Group, was acquired by the listed Norwegian company Kid ASA.

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INTRODUCTIONINTRODUCTION

WE BELIEVE IN COOPERATIONOur entire society is currently changing at great speed. Digitalisation and technological progress are perhaps the mega-trends that affect us most on a daily basis. Many people have “smart” gadgets that are used frequently and are becoming part of our lives. At the same time, the whole world is facing a number of tough challenges such as poverty, unsustainable exploitation of the earth’s resources and rapid changes in the climate and the environment.The saying “One cannot do everything, but everybody can do something” has never been more important. In response to this, we have removed all plastic packaging from around our products, which reduced plastic consumption by 35 tonnes during 2019. We all need to do our part, and we need to do it now. We believe in cooperating with others to achieve the greatest impact. This is why we are looking forward to working with our new owner Kid ASA on various shared initiatives, as well as working in partnership with other organisations. In this way, our efforts contribute even more to sustainable development.As the market-leading home textiles retail chain in Sweden, we have a particular responsibility to constantly develop our sustainability work. Our endeavours to minimise consumption of resources and our negative impact on people and the environment are shaped by the UN’s global goals. We have adopted ambitious climate goals, such as that our products will be made from 100 per cent sustainable cotton in 2020, and that the business will be climate neutral by 2020.

Cotton dominates our purchasing, and we work determinedly to ensure that the cotton in our own-

brand products comes from sustainable sources. We are proud that in 2019, more than 96 per cent of our cotton came from sustainable cotton. Another focus area that has delivered results is our efforts to make it simpler for our customers to make sustainable choices. Today customers can find sustainable products in more than 50 per cent of our range.

At Hemtex, we have designed and sold home textiles for more than 45 years. Our aim is to provide a high level of service and offer high-quality interior decoration that is inspirational, affordable and above all, responsibly manufactured. During the year, we launched a new baby concept, Little Roomies, which has been well received by customers. Little Roomies strengthens our range of sustainable organic cotton.

Hemtex’s goal is to achieve sustainable and profitable growth, which requires a workplace environment in which employees feel stimulated and can develop so that they are engaged and productive. We are therefore especially proud that we won Employer of the year at the Swedish Trade Federation’s Retail Awards.

We have ambitious goals to continue to be able to serve our customers and be their first choice wherever and whenever they shop. This places heavy demands on us, and we are likely to face challenges along the way, but the engagement and the energy at Hemtex gives me confidence that we can achieve our goals. During the year we were also acquired by Kid ASA and we are looking forward to progressing our sustainability work together with our new owners going forward.

Borås i mars 2020Anders LorentzsonVD Hemtex

Initiatives to reduce climate impactHemtex has joined the Swedish Textile Initiative for Climate Action (STICA), which is a collaborative initiative that commenced in 2019 aimed at raising the knowledge and reducing the climate impact of its member organisations, both within the companies and throughout their value chains.

Tougher supplier goals regarding quality and social responsibilityDuring the year Hemtex’s sustainability goals related to social audits and quality certifications were augmented for suppliers of Hemtex own-brand products. Our goal that 100 per cent of suppliers of Hemtex own-brand products in high risk countries should be socially audited remains and 90 per cent of these suppliers must be quality certified. We are proud that both of these supplier goals were achieved in 2019.

Chemical controlsHemtex works actively to reduce and limit the use of hazardous chemicals in the manufacturing process and in products. In total, more than 7,600 tests have been carried out, more than 1,000 of which took place in 2019.

IMPORTANT EVENTS THIS YEAR

” S h a r e o f s u s t a i n a b l e c o t t o n

Launch of Little RoomiesLittle Roomies is a range of baby products focused on sustainability. All Little Roomies cotton products are made from 100 per cent organic cotton and are GOTS (Global Organic Textile Standard) certified. All material is carefully selected based on strict requirements for quality and safety. The range has a soft design using a muted, classic colour scheme, giving the products longevity.

Hemtex sustainable cottonWe are proud that in 2019, 96 per cent of our cotton came from sustainable cotton.

New plastic-free product packaging Hemtex has removed the plastic packaging from all products, which saved 35 tonnes of plastic in 2019.

Winner of the 2019 Retail employer of the year awardHemtex was named the Employer of the year in the Retail Awards, with the following justification: ”Hemtex has turned around its development and created a positive company with a strong confidence in the future, amongst tough competition. Hemtex sees personnel matters as a key success factor in its change journey, and continuously invests in developing the skills of its employees. The company has also reinvigorated its physical stores and simultaneously built a stable e-commerce business.

Hemtex24h launchedHemtex24h was launched at ICA in Sweden, broadening Hemtex’s presence in the Swedish market. All cotton products are made from sustainable cotton and the plastic around the products has been removed. Hemtex24h is part of Hemtex’s sustainability and quality targets.

Kid ASA acquires HemtexKid ASA purchased Hemtex on 15 May 2019, and the latter half of 2019 was spent coordinating and optimising the future sustainability work.

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SUSTAINABILITY FOR HEMTEX

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INTRODUCTION

GLOBAL GOALS GUIDE HEMTEXThe field of sustainability is in constant transformation and the basis for sustainability work changes as the world changes. Hemtex has identified four focus areas where the company has the greatest ability to contribute to the global sustainability goals.

Understanding the world around us, how it is changing and how it affects Hemtex, is crucial to being able to meet the needs and demands of the future. Today’s consumers are often well-read and knowledgeable. Research is progressing, thus increasing knowledge of the finite resources of the planet, and the climate issue is escalating. Environmental, social and economic sustainability are becoming more important and are driving growth.

Hemtex has to do this right in order to meet customer needs, today and in the future. At the same time, Hemtex must create the conditions necessary to extend the lifespan of its products and enable their re-use.An increasing global population and a growing middle class combined with unsustainable consumption patterns demand large-scale change and innovation. The textile industry must continue to take responsibility for encouraging progress on working conditions, living wages and health and safety.

UN Sustainable Development GoalsThe United Nations 17 Sustainable Development Goals are universally agreed goals for people, the planet, prosperity and peace. They are a part of the 2030

Encourage responsible consumption by developing more sustainable and circular products, guide customers towards more sustainable choices and participate in initiatives for improved manufacturing processes.

Contribute to a fair society by promoting human rights in all our interactions. Create economic growth through job opportunities. Pro-actively promote equality for the many women employed in our industry.

Increase cooperation with other stakeholders in issues such as sustainable consumption and manufacturing, climate change, human rights and digitalisation. Partnerships deliver greater knowledge and progress.

Limit global warming by developing a more sustainable product range, minimising waste, creating clean products that last and working towards climate-neutral operations.

Agenda for Sustainable Development and are also referred to as the SDG, Sustainable Development Goals. The aim of the goals is to end poverty and hunger, realise human rights for all, achieve equality and empower women and girls, as well as ensure endurable protection for the planet and its natural resources. The global goals are integrated and inseparable and balance the three dimensions of sustainable development: the economic, the social and the environmental.

These global goals can be achieved through collaboration between all global and local stakeholders, governments, the private sector and civil society. The textile industry has a history of contributing to sustainable development, primarily by creating jobs, but also through other means such as the industry’s support for sustainable agriculture, sustainable fibres and materials, innovative manufacturing methods, standardisation and circular business models.The to-do list is long, that much we know. This is why Hemtex believes in an approach that constantly weaves in more and more sustainable threads. Hemtex supports the UN goals and uses them to govern and inspire its sustainability agenda. Hemtex believes that the global goals offer a unique opportunity to adapt current sustainability initiatives to a common

EXTERNAL TRENDS AND FORCES

In order to meet future needs and demands, is it therefore critically important to understand the world around us, how it is changing and how these changes affect Hemtex. By strongly focusing on consumers and customers, and simultaneously continuing to develop our business, Hemtex can exploit the driving forces that create long-term and sustainable growth.

Digitalisation and transparencyOne of the most significant global forces impacting Hemtex is the extensive digitalisation and technological development that is greatly affecting both consumers and companies alike. In retail, all parts of the supply chain are impacted: product development, purchasing, logistics, supply of goods, product offerings, marketing and customer dialogue. Mobile devices, continuous connectivity and faster processes are creating an entirely new set of circumstances - opportunities as well as challenges. Every day, consumers see enormous amounts of content, which makes it more important for Hemtex to create engaging and relevant content that reaches the customer at just the right time. Personal communication with customers is becoming much more important.

New buying behaviours Digitalisation is also contributing to a change in buying behaviours. More and more consumers are choosing to shop online, and they are spending less time in the physical stores. Irrespective of whether customers visit a physical store or search in an online store, they have high expectations that the purchasing experience should be personal and simple. It should be easy to find what they are looking for, and delivery and payment must be simple. Companies must be able to offer assistance at the right time and goods must be quickly available, in store or online. Channel optimisation is all about how physical stores and online shopping can complement each other, driving optimised sales through symbiosis.

Increasing consumer demandsActive sustainability work is essential for Hemtex to continue being relevant to the customers and employees of tomorrow. Customers are knowledgeable, they demand sustainable products and increasingly expect the retail sector to assume its responsibility, and seven out of ten consumers believe that retailers should work actively with sustainability. Additionally, corporate social responsibility is becoming more important to current and future employees.

Sustainability is a hygiene factorIssues regarding responsibility, environmental impact, business ethics and control, both inside the organisation as well throughout the external supply chain, are becoming increasingly important. Environmental, social and economic sustainability have become hygiene factors - that also drive growth. Focus has shifted from why companies should work with sustainability to how. Over and above a genuine desire to promote a more sustainable and responsible world, the majority of retail companies consider sustainability to be a business advantage. Important issues such as working conditions, living wages and health and safety in the manufacturing countries need continued development, and the textile industry needs to take responsibility for driving progress.

Recycling and circularityThe limited resources of the planet and the climate change issue have increased interest in recycling, circular business models and innovative manufacturing techniques. Consumers are demanding more recycled products, and companies are creating new circular business models and looking at ways to integrate circularity into their supply chains.

Collaboration for sustainable developmentPursuing sustainable development in the textile industry requires increased cooperation between a number of different stakeholders, for example in matters related to sustainable consumption or manufacturing. Innovative and stable supplier relations are a prerequisite for working efficiently.An increasing number of companies are disregarding everyday competition in order to collaborate to promote sustainable development. Different companies are uniting to find shared solutions to complex issues, such as climate impact, water purification, chemical use, animal welfare issues and sustainable manufacturing.

Hemtex’s operations are impacted by several major global trends, predominantly digitalisation, changing consumer expectations and sustainable responsibility as a way to create business value.

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SUSTAINABILITY FOR HEMTEX SUSTAINABILITY FOR HEMTEX

framework and catalyse the industry’s efforts to deal with the important challenges within the global textile value chain.The different sustainability goals greatly impact each other, and goals within one area often produce results in other areas. Hemtex has identified four focus areas where the company has the greatest ability to impact the goals.

Goals and monitoringSustainability involves continuous improvement in areas such as the environment, health, ethics, safety and working conditions. The objective is to reduce the company’s negative impact along the entire value chain, to the largest degree possible. Hemtex works actively to integrate efforts in several

operational areas and has policies and routines in place to act responsibly as a company. Where possible, sustainability goals and key performance indicators exist for strategic and prioritised issues.

Hemtex’s operations will be climate neutral by 2020.

100 per cent of Hemtex’s suppliers of own-brand products in high-risk countries will be socially audited.

90 per cent of suppliers of Hemtex own-brand products will be quality certified by the end of 2020.

Strategic sustainability goalsHemtex has identified four focus areas where the company has the greatest ability to contribute to the goals.

Social audits are performed at suppliers in high risk countries to ensure that Hemtex own-brand products are manufactured in an acceptable way from a human rights perspective. This goal was achieved. 100 per cent of Hemtex’s suppliers were audited in 2019.

Hemtex’s operations will be climate neutral to limit rises in temperatures. This goal requires us to review and develop equipment, operations, contracts and knowledge. In 2019, Hemtex’s direct emissions of greenhouse gases increased by 25 per cent, compared with the base year of 2006, and emissions increased considerably compared to last year. There are large disparities in the reporting from different transport providers which have been changed, which explains the large increase.

Read more on page 21

Read more on page 9, 23

Consumers must feel confident to shop at Hemtex. The foundation of Hemtex’s quality work is to ensure that suppliers maintain safe manufacturing. Extensive work has taken place during the year, which led to the goal already being achieved in 2019. 90 (78) per cent of suppliers of Hemtex own-brand products are now quality certified. Read more on page 35

Selected sustainable products are labelled and include products manufactured with more sustainable materials or products manufactured with less environmental impact than conventional methods.In 2019, more than 50 per cent of the Hemtex range was sustainable.

Hemtex will guide customers towards more sustainable choices and work to increase the share of sustainable products in its range.

All cotton in Hemtex own-brand products will come from sustainable sources by 2020.

The cotton in Hemtex own-brand products will come from sustainable sources by 2020, as a way to accelerate an improvement in conventional farming methods.Approximately 96 per cent of Hemtex own-brand cotton products come from what Hemtex defines as more sustainable cotton.

Read more on page 13 and 27 2017 2018 2019

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HEMTEX CLIMATE GOALS

CLIMATE NEUTRAL BY 2020

This goal involves time-bound plans to reduce greenhouse gas emissions as well as regular reporting on progress. Hemtex’s climate goal was established using the Science-Based Targets method as well as the GHG Protocol Corporate Accounting and Reporting Standard.

The company will achieve its goals by reducing climate-impacting emissions and increasing resource efficiency. Any climate impact that cannot be completely eliminated from operations before the end of 2020 will be offset using emission allowances.

The goal encompasses the climate impact of Hemtex’s own operations. It requires a review of operations, contracts and knowledge to minimise the climate impact

of Hemtex stores, warehouses, business travel and freight transportation between warehouses and stores.

Hemtex’s responsibility stretches beyond the boundaries of its own operations, however the company is not able to influence every part of the value chain equally.By imposing environmental demands on suppliers and by working together with manufacturers to push for the development of a more sustainable range, some degree of influence can nonetheless be exerted outside Hemtex’s own operations. An important part of this work also involves helping customers to reduce their climate impact, including offering a wide range of sustainable products.

Customer

Customers are guided towards

making more sustainable choices

Level of impact

High LowLow

Transpor t

Hemtex places demands on suppliers and

works with manufacturers to develop a

more sustainable range. The company also

works to streamline and reduce emissions

from transportation

Climate neutral by 2020:- Warehouses and offices; energy and

business travel

- Transportation; improvements e.g. in

renewable fuels

- Stores; improvements in energy

consumption

Climate change impacts us all. To contribute to the UN’s goal of limiting global warming, Hemtex has committed to an ambitious climate goal and has joined STICA. Hemtex operations will be climate neutral by 2020.

To t a l a m o u n t o f s u s t a i n a b l e c o t t o n

Producers

Renewable energy

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INTRODUCTION

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Total carbon dioxide emissions according to GHG Protocol, tonnes. 2019 2018 2017

Scope 1: 0 0 0Scope 2: 208 224 231Scope 3: 1032 462 225

Distribution of carbon dioxide emissions, %

• Goods transport 78 %• Energy 18 %• Business travel 4 %

Distribution of carbon dioxide emissions according to GHG Protocol, %

• Scope 2, 16 %• Scope 3, 84 %

Total carbon dioxide emissions, tonnes

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GREENHOUSE GAS EMISSIONS

Scope 1: Emissions from business travel with leased service vehicles.Scope 2: Emissions from energy in warehouses, Hemtex stores and

offices.

Scope 3: Emissions from business travel, emissions from Swedish Hemtex stores not owned by Hemtex, emissions from shipments between warehouses and stores.

Share of fossil/non-fossil emissions not reported.

• 2006, 987 - base year• 2015, 570• 2016, 535• 2017, 456• 2018, 685• 2019, 1224

2006 2018 2019

HEMTEX VALUE CHAINHemtex is working actively to integrate sustainability and minimise negative impacts in every aspect of the business, often by collaborating with various partners. The value chain, from idea to the finished product in stores and then usage, is complex and holds many challenges, but also many opportunities.

CSR MISSIONHemtex’s products should

be manufactured with consideration for the

environment, safety and working conditions.

Hemtex’s sustainability work aims to safeguard all the

stakeholders the company interacts with.

Product development and choice of materialsHemtex is gradually increasing its share of sustainable products and

endeavours to find sustainable solutions for raw material consumption.

Careful choice of materials ensures product quality, safety and durability,

as well as the possibility of future recycling.

12 Manufacturing

There are major challenges in the

manufacturing chain, ranging from human rights and working conditions to

water consumption and the use of chemicals. Through comprehensive agreements, suppliers commit to complying with the Hemtex Code of Conduct, product policy,

chemical restrictions and quality requirements. Compliance with these

requirements is followed up and evaluations are carried out

continuously.

3 TransportationHemtex aims for maximum efficiency in logistics management to minimise

its negative impact on theenvironment. Environmental impact

can be reduced by choosing the right means of transport and constantly

striving for maximum fill rates in containers and trucks. Hemtex’s

goods are almost exclusively shipped by sea and only a small proportion is

air freight.

5 Product usageAll Hemtex products should be able to

be used for a long time. To achieve this, we make continuous improvements

based on feedback from customers and follow-up of complaints received.

Hemtex also collects obsolete products to support increased reuse and

recycling, and create more circular business models for textiles.

All Hemtex employees contribute to all parts

of the value chain.

mployeesE

4 Stores and sales

Hemtex’s overarching sales goal is to achieve the maximum customer

satisfaction through a combination of responsible marketing, good service and high-quality products. Hemtex also

endeavours to guide customers towards sustainable and ethical choices. Recycling

waste from operations and reducing energy consumption lessens the

environmental impact of the stores.

STICA (Swedish Textile Initiative for Climate Action)STICA is an initiative launched in 2019 for Scandinavian textile companies. The shared goal of the companies is to reduce their climate impact by at least 30 per cent by 2030. STICA is based on the GHG Protocol Scope 1, 2 & 3 as well as SBT (Science Based Targets) aimed at limiting global warming to 1.5 degrees. STICA has created a network of experts and companies with the aim of creating consensus and reducing the climate impact of the industry. STICA is a collaborative “learning by doing” initiative, through which methodologies and tools will be co-created via discussions, workshops and work groups. These will then be available for use by large and smaller companies alike.

During 2019 members have spent time on data collection and climate calculations. In 2020 work will continue and various groups will work on different focus areas but towards the shared goal. Decisions will be taken together on the boundaries and on the areas that are important to include in the climate calculation. Various climate calculations may need to be performed in different ways depending on the resources available. However, the calculations must always be made in accordance with a method that is based on the GHG Protocol and on the Science Based Targets initiative.The overarching commitment of the STICA members is the 1.5-degree target, and collaboration significantly facilitates the accounting of the climate impact.

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Scope fördelning

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PRODUCT DEVELOPMENT

Hemtex is gradually increasing it s share of sustainable products and is therefore pursuing sustainable

solutions for raw material consumption. Careful choice of materials ensures

product quality, safety anddurability, as well as the possibility for

future recycling.

PRODUCT DEVELOPMENT &

CHOICE OF MATERIALS CONSCIOUS CHOICE OF MATERIALSHemtex can produce more sustainable products by taking resource consumption and environmental impact into consideration early on during the design process.

In a world of increasing consumption and swift fashion trends, Hemtex believes in a new trend, one that is focused on quality and good design. This aligns with Hemtex’s ambition to offer products that can be used for years to come. A doubling of the lifespan of all textile products would almost half the climate impact of the products.

Hemtex products are designed at the head-office with highest priority given to product safety, quality and a longevity. Some of Hemtex’s core products have been part of the range for more than 10 years and others for more than 25 years.

Hemtex aims to contribute to more sustainable consumption and manufacturing. The company’s ambition is to increase the more sustainable range, and goals and policies have been set for many important and strategic raw materials. During product development Hemtex can actively work to develop more sustainable alternatives and steer material choices based on resource consumption and environmental impact.

Only sustainable cotton by 2020The majority of Hemtex’s products come from renewable raw materials such as cellulose, paper, cardboard and wood. Cotton is the raw material that dominates purchasing, and Hemtex has committed to a goal that all cotton must come exclusively from sustainable sources by 2020. For several years, Hemtex has been collaborating with the Better Cotton Initiative, to accelerate improvements in conventional cultivation methods, and above all to support and invest in cotton farmers.

To reach its sustainable cotton goal, Hemtex is also working to increase the amount of organically grown or recycled cotton in its range, as well as switching to other sustainable fibres such as lyocell.

During the third quarter of 2018 Hemtex accepted and joined the Textile Exchange 2025 Sustainable Cotton Challenge. This is a challenge that is entirely in line with Hemtex’s sustainability work and inspires market

change towards the usage of more sustainable cotton.Today 96 (80) per cent of all cotton comes from sustainable sources that support responsible cultivation. In 2019 the percentage of cotton grown according to BCI’s methods increased to 92 (84) per cent at Hemtex. Activities are continually underway to expand the number of product groups and to find more channels and suppliers that support BCI.The supply chain parties, including cotton ginners, spinning mills, weaving mills, sewing factories and brands, report the volumes they purchase into a database. In this way the amount of Better Cotton the parties have contributed to can be monitored, even if the individual product is not traceable. The system relies on mass balance control similar to green electricity.

Greater proportion of organic cotton Hemtex’s Baby range is manufactured from organic cotton, and organic cotton accounts for about 4 (2) per cent of the total amount of cotton used in the entire Hemtex range of products. Organic cotton is a premium raw material and some 2 per cent of the world’s cotton is organic.

For cotton to be classified as organic it must be grown without the use of chemical pesticides or fertilisers.

PRODUCT DEVELOPMENT AND CHOICE OF MATERIALS

16 %of the total climate impact

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PRODUCT DEVELOPMENTPRODUCT DEVELOPMENT

Cotton from sustainable

sources by 2020

Genetically modified crops cannot be used, and natural processes must be used to retain healthy soils.Lifecycle analyses show that the global warming potential of organic cotton is almost 50 per cent less than that of conventionally grown cotton, and organic cotton demands only ten per cent of the water used for irrigation compared to conventional cotton.Hemtex’s organic cotton is mainly certified according to GOTS, (Global Organic Textile Standard) but also according to OCS (Organic Content Standard) for products with a cotton content of less than 70 per cent. GOTS and OCS are world-leading certifications for organic fibres, the standards are controlled by third parties and encompass traceability throughout the entire chain, from cultivation to production. To ensure that the quantity of organic cotton sold aligns with the amount that is actually farmed, traceability is important throughout the entire chain, and not only in terms of the raw material. Hemtex requires certificates for finished products, with Hemtex stated as the receiver and buyer on the certificate.GOTS standard encompasses requirements on working conditions for those who work in the production chain, as well as strict demands on chemical usage.

Recycled materialA more circular and resource-efficient manufacturing of textile fibres is crucial for the future.Recycled fibres and goods save the earth’s resources and reduce the quantity of waste. Using recycled materials requires fewer chemicals, less water and less energy in production.

However, there are still some technical challenges in creating new materials out of recycled textiles. To maintain quality the recycled materials sometimes need to be mixed with virgin or other material. Hemtex monitors this field as well as the development of new technologies to solve these challenges.

Hemtex’s aspiration is that the supply of recycled fibres will increase as cooperation progresses with partners and suppliers to find ways to reuse and recycle fibres.

As polyester is a strategic raw material, Hemtex has

established goals to increase the proportion of recycled polyester. Today, around 17 per cent of Hemtex’s products contain some content of polyester and two per cent contain recycled polyester. By 2025 the company aims to increase the percentage of recycled polyester by 25 per cent, or find better methods for fossil-based fibres. As an example, during the year Hemtex has developed and launched a quilt, cushion and inner cushion containing recycled polyester.

For Hemtex products to be labelled as recycled, the whole product must be certified and verified in accordance with GRS, the Global Recycled Standard, or RCS, the Recycled Content Standard.

According to several reports and research, micro-plastics pose a challenge for synthetic fibres. Synthetic fibres are incredibly durable and easy-care, but difficult to break down. This is a complex issue as there are no standardised methods for measuring and control. The industry is cooperating through different networks to increase knowledge in this area. New methods to regulate and reduce fibre emissions, and new fibres with similar properties must be developed, and we need to prevent materials ending up in nature and ensure they are re-used in a closed cycle.

Raw materials from the forestArtificial cellulose fibres such as viscose, modal and lyocell are made from wood. Hemtex products currently only contain a small portion of artificial cellulose fibres, 0.3 per cent. Globally, the use of this type of fibre is increasing and it may be an option for reducing the use of cotton as the fibre demands less water and fewer pesticides in production.However, according to the organisation Canopy, one third of the world’s viscose comes from endangered virgin forests. The chemical process used in manufacturing viscose may also have a negative environmental impact. As a more sustainable alternative, Hemtex aims to replace viscose with lyocell.The manufacturing of lyocell has a relatively small negative environmental impact as it takes place in a closed-loop process. This means that solvents used can, for the most part, be recycled and re-used.The Lyocell fibres used by Hemtex come from FSC certified (Forest Stewardship Council) trees, which guarantees environmental and responsible forestry.

Hemtex has clearly defined routines and requirements relating to palm oil, which is a common ingredient in candles. Products containing palm oil must be RSPO certified (Roundtable on Sustainable Palm Oil) to ensure that the farming does not lead to devastation of rain forests.Every product made from wood or pulp that Hemtex imports into the EU requires documentation, in accordance with the EU’s timber regulations. The purpose of documentation and traceability is to prevent

wood from illegal logging being imported into the European market. Hemtex’s ambition is to increase the portion of FSC certified wood and paper products. The FSC certification is a guarantee that the wood is sourced from sustainably managed forests. All tropical woods purchased by Hemtex must be FSC certified.

Traceable down and better animal welfareAs one of the Nordic countries’ leading experts in quilts and pillows, Hemtex’s policy is that all down at Hemtex must be RDS certified (Responsible Down Standard). This standard ensures better animal welfare and credible traceability throughout the entire manufacturing chain, from farm to product. As an example, controls are carried

out to check that the down has not been plucked from live birds or force-fed birds. Down is resource efficient as it is a biproduct of the meat industry. It is also biodegradable. Purchases of down and feathers are strictly controlled by third parties, and for increased control, Hemtex has chosen to work with a few selected suppliers.Hemtex has clear guidelines on materials of animal origin, such as down, merino wool, leather and hides. The company adheres to Svensk Handel’s (Swedish Trade Federation) animal welfare policy and is a member of a working group aimed at increasing knowledge of the challenges of buying materials of animal origin.

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PRODUCTION

There are major challenges in the manufacturing chain, ranging from human rights and working conditions to water consumption and the use of chemicals. Through

comprehensive agreements, suppliers commit to complying with the Hemtex Code of Conduct, product policy, chemical restrictions, climate impact and quality

requirements. Compliance with these requirements is followed up and evaluations are carried out continuously.

MANUFACTURING

COLLABORATION WITH SUPPLIERSSafe products and safe manufacturing are a top priority for Hemtex. There are great sustainability challenges in the supply chain, but also opportunities to influence so as to reduce environmental impact, improve social conditions and increase product safety. Long-lasting and close partnerships with Hemtex suppliers enable increased openness, and the presence of staff in manufacturing countries facilitates control and development.

Long-term relationshipsIt is important to Hemtex that its products are produced under the best conditions possible. Having a stable stock of suppliers facilitates the work as does a well-developed monitoring system to control social, environmental and quality matters.

Hemtex’s relationships with its suppliers are built on full transparency on where and how the products are made. In several of the countries where Hemtex’s products are manufactured, there is a lack of adequate legislation related to the environment, human rights and employment law. In other cases, laws exist but their enforcement is not controlled. Hemtex therefore endeavours to have long-term relationships with suppliers and as few intermediaries as possible.Several Hemtex suppliers are vertical and take care of everything from spinning the yarn to sewing products, which means better control of the value chain.

Terms and complianceAs a prerequisite for doing business with Hemtex, all suppliers must comply with Hemtex Purchasing Instructions including requirements. The agreement stipulates requirements related to the environment, social standards and working conditions.

Almost 80 (90) per cent of Hemtex’s purchases are made from Asia, with China and Bangladesh being the largest purchase markets. In several of the countries where Hemtex’s products are manufactured there is a lack of adequate legislation, or a lack of enforcement and control of compliance with the laws. To ensure that Hemtex own-brand products are manufactured in an acceptable manner in terms of human rights, visits, training programmes and various collaborative projects are carried out on site with the suppliers in high-risk

countries. High-risk countries are defined according to the BSCI definition (Business Social Compliance Initiative).

TransparencyOne risk area linked to the complexity of the supply chain is transparency. The Hemtex Purchase Agreement is signed by the supplier that suppliers Hemtex, but the agreement also requires Hemtex’s suppliers to monitor their sub-suppliers. Suppliers that use unauthorized sub-suppliers complicate the process of ensuring that manufacturing is carried out in line with the Code of Conduct. Hemtex does not accept unauthorized sub-suppliers and relationships with suppliers are based on full transparency into where and how products are manufactured.

The first inspection of a supplier is always pre-announced, thereafter both pre-announced and unannounced inspections are conducted. Quality inspections of Hemtex products are also carried out, and these controls also help ensure that the products are manufactured in the factory that actually holds the contract with Hemtex.

MANUFACTURING

64 %Of the total climate impact

18 19

PRODUCTIONPRODUCTION

PRODUCT SAFETY AND QUALITYHemtex’s goal is that nine out of ten suppliers of Hemtex own-brand products must be quality certified by the end of 2020. We are proud of that by the end of 2019, 90 (78) per cent were quality certified. The foundation for high levels of product safety is ensuring that all suppliers have good, safe and traceable manufacturing.

Auditing new suppliersAll Hemtex products must comply with legislation for safety, labelling and chemical content. All new Hemtex suppliers are quality audited. The level of quality is governed by purchase agreements that include extensive detailed product specifications describing the quality level that products need to achieve.

To make sure that requirements are met, selected tests are performed by independent test institutes. These tests follow standardised methods and are documented in detailed test reports, which are reviewed and approved prior to delivery. Labelling and packaging are also controlled before approval. In 2019, 4,327 quality tests were carried out. 97 per cent of these were approved and measures were taken for the remaining 3 per cent before manufacturing.

48 people from 18 suppliers have received training in Hemtex’s quality and testing requirements and sustainable materials.

Quality certified suppliersHemtex requires and controls that suppliers have a quality management system and that they are certified by a third party or approved through Hemtex’s own quality audits.

Production controls in placeQuality and production controls are carried out by the Hemtex production office IGS and, if necessary, by third parties. Final inspections can be supplemented by further inspections both before and during production. This work minimises the risk of faulty goods reaching stores and allows for any irregularities to be corrected at the right time.

Collaboration with IGS means that Hemtex has local staff employed in the countries that have the most manufacturing. The local staff members are responsible for on-going contact with suppliers, quality controls and follow-up. Hemtex is in daily contact with the local purchasing offices.

Improvement through follow-upHemtex’s quality, purchasing and design departments hold regular risk analysis meetings to discuss any quality deviations and to perform risk assessments on new products and manufacturing processes. This is supplemented by continuous monitoring of product returns and customer feedback.

Percentage of Hemtex own-brand product suppliers that are quality certified

100%

80%

60%

40%

20%

0%

• 2019, 90 %• 2018, 78 %• 2017, 73 %

Risk assessment

Quality requirements

Manufacturing

Product testing

Follow-up

Quality certification

Only 0.3 per cent of sold products

were returned

PRODUCT QUALITY 2019

Hemtex’s preventive quality work is having positive results.

• One (1) product was withdrawn due to a lack of legal compliance or safety risks.

• The percentage of product returns from customers remained at the same level as previously, 0.3 percent.

• Two products that did not meet the quality requirements have been removed from the range.

• No products have been recalled due to excessive levels of restricted chemicals.

Finalinspection

20 21

PRODUCTIONPRODUCTION

ENVIRONMENTAL CONSIDERATIONS IN MANUFACTURING

Responsible water useA lot of water is required in the manufacturing of textiles and water is a scarce resource in many of the manufacturing countries. Hemtex’s goal is for suppliers to be knowledgeable and conscious about water use in production, so that they use the minimum amount of water and reduce contamination of the water used. One example of how Hemtex is working with suppliers for responsible water management is the project with STWI (Swedish Textile Water Initiative). STWI is a collaborative initiative that is working for a global shift towards sustainable manufacturing throughout the supply chain. During the year, STWI has undergone a reorganization and one project has been started during the financial year.

All suppliers must comply with the environmental legislation applicable for the country or province. Hemtex’s Code of Conduct requires that suppliers that use dyeing or washing processes must have an operational water treatment system that is adequate for the plant’s production volumes, and that waste is managed in the best possible way. During factory inspections, water treatment and chemical handling are very closely scrutinised, shortcomings and breaches are reported, and action plans are defined together with the suppliers. Follow-up takes place according to procedures set.

Responsible chemical managementHemtex works actively to reduce and limit the use of hazardous chemicals, both in the manufacturing process and in products. Chemical and waste disposal are also regulated in the Code of Conduct in order to reduce risks to the health of the factory workers and to prevent chemicals and waste contaminating watercourses or groundwater.

Chemicals are used at several stages of the textile production process, including to create colour fastness, to soften fibres and to improve certain properties. Most chemicals are safe to use, but some may involve risks for people who handle the chemicals in the production process, for the environment, or for end users of the products.

Hemtex has drawn up a detailed list of restricted substances. The restriction list is continually updated and is not only based on legal requirements but also follows the principle of precaution.

To verify that chemical requirements are complied with, random tests are carried out regularly by an independent third-party laboratory. These tests are performed in accordance with standardised international testing methods and are documented in detailed test reports, which are reviewed and approved prior to delivery. In total, more than 7,600 tests have been carried out, more than 1,000 of which took place in 2019.

Since 2006, Hemtex has been a member of the Chemicals Group at RISE, which gives access to expertise in the area of chemical usage, as well as information on new laws and regulations and the latest research. The company is also represented on the Swedish Textile Importers’ Reference group concerning chemical-related issues.

During the year Hemtex did not need to recall any goods due to their containing too high levels of restricted chemicals.

Customers should feel safe with and have confidence in Hemtex’s range. That is why Hemtex places requirements on suppliers regarding production and traceability.

The Chemicals Group is a network run by RISE together with experts from universities and public authorities. The purpose of the group is to convey legal requirements and distribute the latest news regarding chemicals and environmental issues to member companies. The network currently has more than 140 member companies. Membership includes regular meetings and provides access to ChemicAll - one of the OECD’s top-rated chemicals tools. ChemicAll is a database of hazardous substances.

NETWORKING FOR INCREASED KNOWLEDGE ON CHEMICALS

SOCIALLY SUSTAINABLE MANUFACTURINGHemtex’s goal is to be a responsible long-term member of the communities in which the company operates and contribute to positive change. Rather than terminating collaboration with suppliers that do not meet requirements, Hemtex endeavours to find solutions.

Hemtex always carries out a risk analysis of new suppliers and factories. Before commencing any collaboration with suppliers in high-risk countries, an audit is performed to ensure that the factory meets the requirements of the Code of Conduct.

The Group Code of Conduct is based on the UN’s Guidelines on Human Rights, the Convention on the Rights of the Child and ILO’s (International Labour Organization) core conventions. Compliance is ensured by combining audits performed by our own staff or consultants with third-party audits, performed by BSCI, ETI, SMETA and SA8000, for example. The goal is responsible manufacturing, where suppliers continuously make progress and comply with the Group’s Code of Conduct.

Hemtex’s goal is to contribute to change instead of terminating collaboration. An important part of this work is to create a good dialogue and understanding with the factory’s management so that irregularities can be corrected in a systematic and sustainable manner.

Code of Conduct breachesIn the event of any breach of the Code of Conduct, an investigation is carried out into the underlying cause. A corrective action plan is then put into place together with the supplier. Simply carrying out an audit does not lead to improvement. It is the process of monitoring and setting up corrective action plans that will enable the factory to make progress and improve working conditions for those who work there. Follow-up visits and dialogue are therefore of great importance.

The first time a supplier is not approved, they are given a chance to correct the problem. If the supplier does not show any willingness to resolve serious irregularities or if a serious violation is repeated, collaboration is terminated.In 2019 Hemtex decided to terminate its collaboration with three factories that did not adequately fulfil the Group’s requirements on human rights and did not subsequently implement the necessary improvements after the first audit.

The most common breaches of the Code of Conduct principally concern documentation and employment terms and conditions, as well as salaries and working hours. If documentation is incomplete in the factory, for example if proof of employment, time recording, and payroll documentation is lacking, Hemtex cannot

HEMTEX’S CODE OF CONDUCT REQUIREMENTS:• Laws and regulations must be complied

with.

• Workers shall be free to join trade unions and to bargain collectively.

• Prohibition of discrimination must be complied with.

• Wages and compensation must be paid according to applicable rules.

• Overtime must be remunerated and must not exceed applicable rules.

• Health and safety matters must be respected in the workplace.

• Prohibition against child labour must be complied with.

• Prohibition against forced labour must be complied with.

• Approved environmental work and proper disposal of waste must be in place.

Percentage of socially audited suppliers in high-risk countries

Audit result

• Good, 10 %• Acceptable, 5 %• Need for improvement

within 15 months, 73 %• Need for improvement

within 6 months, 9 %• Unacceptable , 3 %

• 2019, 90 %• 2018, 78 %• 2017, 73 %

100%

80%

60%

40%

20%

0%

22

PRODUCTION

SWEDEN 14 %

OTHER EUROPE 6 %

INDIA 9 %

CHINA 44 %

BANGLADESH 15 %

OTHER ASIA 1 %

PAKISTAN 11 %

HEMTEX’S PURCHASE MARKETS BASED ON PURCHASE VALUE IN 2019

TRANSPORTATIONHemtex endeavours to achieve the most efficient

logistics management possible in order to minimise negative consequences on the environment.

Environmental impact is reduced by selecting the right means of transport and constantly striving for maximum fill rates in containers and trucks.

Hemtex’s goods are almost exclusively shipped by sea. Air freight is used for only a small percentage

of goods.

Since 1 January 2014, high-risk countries have been defined in accordance with the BSCI definition (Business Social Compliance Initiative).Hemtex has suppliers in seventeen countries: China, Bangladesh, Belgium, India, Pakistan, Sweden, Turkey, Estonia, Moldavia, Vietnam, Russia, Denmark, Norway, Poland, Holland, Ukraine and Thailand. Through collaboration with other players in the industry, Hemtex can further contribute to improvements, for example, in terms of sustainable production and working conditions.

Methods of combating child labour and forced labourHemtex’s basic rule regarding child labour is that people under the age of 15 cannot work for any of its suppliers. If national legislation imposes more stringent requirements, it is those that apply. In China, for example, the legal working age is 16.Hemtex also requires that suppliers pay careful attention to young workers (under the age of 18), for example in relation to the right to limited working hours. If Hemtex discovers or suspects that a worker is underage, the supplier is contractually obliged to take measures to ensure the best outcome for the individual. The best possible solution is sought together with the supplier, taking into account the child’s age, education and social situation.Forced labour or compulsory labour is prohibited. It is important that workers receive continuous wages for work performed, that they are entitled to take holiday and terminate their employment with wages for work performed. No incidents of child labour or forced labour have been discovered or reported during the year.

Bangladesh Accord The Accord on Fire and Building Safety initiative was launched in 2013 after the collapse of the Rana Plaza factory outside Dhaka in Bangladesh, when more than 1,100 people died and 2,500 were injured. Hemtex was the first interior decoration group to sign up to the initiative. Within the initiative, textile industry peers, factories, trade unions and worker organisations work together to ensure a safe and secure workplace environment for those working in the textile industry in Bangladesh. In May 2018, the first Accord was replaced by a second initiative - Transition Accord on Fire and Building Safety. Hemtex has also signed this accord to continue working towards safer factories in Bangladesh. The plan for the new Transition Accord is that the initiative will transition from being run by foreign buyer companies and unions to being run by the Government of Bangladesh, the Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers and Exporters Association. For more information see www.bangladeshaccord.org.

Suppliers in high-risk

countries must be socially audited

verify compliance with the Code of Conduct, such as controlling wages, overtime regulation or controlling the age of the workers. Hemtex endeavours to make suppliers aware of the importance of good documentation through communication with factory management and following up on action plans.

In accordance with the Hemtex Code of Conduct and local legislation, suppliers must at least pay the country’s statutory minimum wage to their employees.It is difficult to verify that overtime is kept within acceptable limits, especially if the time recording is flawed. There may be many reasons for the existence of overtime. In cases when employees work far from home, they may want to work intensively for periods of time and then return home. Another reason may be low wages.

The Right to Collective Agreements and Freedom of AssociationThe right to join a union and negotiate collectively is a basic right. Unfortunately, trade unions are weak in many of the manufacturing countries and are even illegal in certain countries.Hemtex applies pressure on suppliers to ensure that this right is not violated. Both factory managers and their employees are informed of their rights, and compliance with requirements is followed up in social audits. All suppliers must allow workers to freely choose their own representatives with whom the company can have a dialogue regarding workplace issues. Internal work committees exist in many factories. These associations allow employees to engage in dialogue on workplace issues and they provide an alternative for facilitating fair negotiation. However, they do not replace functioning unions and it is important to check how the committees operate and that the members are elected by the workers.

24 25

TRANSPORTATIONTRANSPORTATION

Hemtex aims for efficient logistics management that minimises negative consequences on the environment. Since 2008, Hemtex has followed up carbon dioxide emissions caused by its own freight purchases - throughout the entire chain from supplier to the store. Environmental impact can be reduced through the right means of transport and maximum fill rates in containers and trucks. Over the last ten years, CO2 emissions from Hemtex’s freight transportation have decreased by 45 per cent.

From the factory to the storeHemtex’s goal is to use ships and trains to the greatest extent possible and avoid air transportation. Transporting goods by ship generates fewer emissions per product than transporting by air or road, and the majority of Hemtex’s imported goods are shipped by sea from the manufacturing countries. In 2019, 98 (97.5) per cent of imports were transported by ship.

From the port of Gothenburg, goods are transported by truck to a distribution centre. Truck transportation accounts for 1 per cent of total transportation, which corresponds to 1 per cent of the CO2 emissions from the transportation of imported goods.

The flow of goods from the warehouse to the stores has

SUSTAINABLE SEA TRANSPORTATIONFreight transportation and business travel are included in Hemtex’s goal to become climate neutral by 2020. Hemtex goods are almost exclusively shipped by sea from the manufacturing countries. Transportation is therefore a relatively small part of Hemtex’s climate impact.

not worked adequately during the year, which has led to lower efficiency and increased emissions. To improve this situation, Hemtex will start working with a new logistics partner from the first quarter of 2020.

Air freight is used only in exceptional cases. A small number of product samples are sent by air during product development, but this method of transport is always climate compensated. In 2019 the share of air freight increased slightly from 0.5 per cent to 1 per cent. Air freight accounts for only a small share, but since the total amount of freight decreased while air freight remained the same, the share is higher.

E-commerce is increasing, but most orders are still delivered to stores, rather than to collection points or as home delivery. Orders that are to be collected from stores are picked from the actual stores if products are available there, which saves a shipment. The amount of goods provided from stores rather than from warehouses is growing constantly.

Fewer emissions per productHigher fill rates reduce CO2 emissions per product, for instance through co-loading in the manufacturing countries and delivering directly to stores from manufacturing countries. Hemtex’s range has been


Carbon dioxide emissions from business travel by air, train and car (tonnes)

2019

2018

2017

44

63

79

Break-down of transport types for imports in 2019

• Ship 98%• Truck 1% • Plane 1 %

Diagramrubrik

Båt

Bil

Flyg

streamlined and the proportion of own-manufactured products has increased, which facilitates co-packing for direct delivery to stores. Fill rates of deliveries from warehouses to the stores has increased due to the number of deliveries per week being reduced.

The fill rate is monitored per shipment and compiled per month and year. In 2019, the fill rate for incoming containers was 92 (91.7) per cent of the target and 74.6 (74.4) per cent of the total capacity.

Effective business travelHemtex’s ambition is to minimise CO2 emissions from business travel. Key performance indicators are reported quarterly for follow-up, and initiatives are under way to minimise travel, such as replacing travel with video conferencing.

Total CO2 emissions from all transport per ton(including samples to office)

2019

2018

2017

2016

2015

1943

1216

1220

1 340

1 457

Total CO2 emissions

CO2 emissions from all transportation, throughout the entire supply chain from suppliers to stores, have increased significantly compared to last year, as has the average CO2 emissions per product*.

Emission factors for calculating carbon emissions are gathered from each carrier and compiled for monitoring and follow up.

* Comment: The increase is due to a change in carriers that use different calculation methods.

All business travel is arranged through the same supplier, which makes it simple for Hemtex to track how many journeys are made by train, air and car. This also provides an overview of the costs of business travel as well as its environmental impact.

Hemtex also requires that the environmental impact of company cars should be as little as possible, taking into account vehicle type. When cars are changed, a car with lower emissions than the previous one will always be chosen. Cars must meet environment class Euro 6 or higher. The average emissions from all of Hemtex’s cars is currently 128 grams (120) CO2 per kilometre, the amount of CO2 for 2019 is 20 tonnes compared to 29 tonnes in 2018, a reduction of 45 per cent over the year.

Carbon dioxide emissions from freight transportation between warehouses and stores (tonnes)

2019

2018

2017

2016

2006

371

123

166

220

Average CO2 emissions per product (gram)

2015 2016 2017 2018 2019

230

220

200

1 80

160

140

1 20

100

965

TRANSPORTATION

27

STORES & SALES

STORES & SALESHemtex’s overarching sales goal is to achieve the highest possible customer

satisfaction through a combination of responsible marketing, good service and high-quality products. Hemtex also endeavours to guide customers towards

sustainable and ethical choices. Recycling waste from operations and reducing energy consumption lessens the environmental impact of the stores.

MORE SUSTAINABLE CONSUMPTIONHemtex’s stores contribute to more sustainable consumption by guiding customers towards sustainable and ethical choices and working actively to reduce the stores’ direct environmental impact.

A number of tools and measures are needed to facilitate the transition to sustainable patterns of consumption and manufacturing. Training is an important cornersto-ne. Through training, people can acquire values, knowledge and skills that enable them to contribute to sustainable development. Another cornerstone is information. Clear and easily accessible information in the form of eco-labelling, consumer information ser-vices, product information in stores, web-based infor-mation and more, makes it easier for consumers and others to make responsible and sustainable choices of products and services. No incidents or non-compliance with labelling and information have been reported during the year.

Accurate and extended labellingAll Hemtex’s textile products must be properly labelled including accurate fibre composition, care instructions and country of origin on the product. Procedures for how a product should be labelled and presented to the customer are included in the purchase agreement.There are a number of product categories with specific regulations regarding labelling. Hemtex constantly monitors and follows these up so that the customer receives correct information.If a textile product contains materials of animal origin, this must be stated on the product label. Lighting products must be labelled in accordance with applicable safety regulations. In cases where a product is subject to food contact regulations, this is ensured through testing and labelling according to applicable rules and directives for the market. All care instructions are checked before delivery.

Clear labelling for conscious consumptionHemtex has a group-wide focus on guiding customers towards making more sustainable choices.Through clear labelling of composition, standards and certifications of the product range, customers receive clear information about the content of the products, which promotes more conscious and sustainable consumption. Sustainable products, which now comprise more than 50 per cent of the range, are made visible in the stores and marked as sustainable.

STORES & SALES


OEKO-TEX® certified products Many Hemtex products, mainly products which come into regular contact with skin, are also OEKO-TEX® Standard 100 certified. OEKO-TEX® Standard 100 guarantees that products do not contain substances that are dangerous to health. Everything is controlled by an independent Institute - fabrics, threads, labels, embroidery and print. The majority of Hemtex’s towels, bed linen and dressing gowns are certified according to class 1 or 2, which are the two classes with the strictest requirements.

Clear labelling makes it easier for consumers to make responsible choices. Hemtex endeavours to help custo-mers make sustainable choices. More than 50 per cent of the Hemtex range now carries different sustainable labelling. The concept is not only a label though, it is also an on-going process into which Hemtex continuously weaves more and more sustainable threads.Hemtex has a common umbrella brand for a number of approved and relevant standards. For a product to be labelled as sustainable, the majority of its content must be manufactured from more sustainably grown raw materials, recycled materials or other more sustainable fibres such as lyocell. The concept also includes products that have been grown or produced with less environmental impact. Good traceability is a pre-requisite for these goods.

28 29

STORES & SALESSTORES & SALES

Total energy consumption in stores (MW)

2019

2018

2017

2016

Average energy consumption in stores (kWh/m2)

238

265

224

211

Total energy consumption in offices (MW)

2019

2018

2017

2016

216

231

287

290

Energy and district heating in warehouses (MW)

2019

2018

2017

2016

87

97

82

78

Average energy consumption in offices (kWh/m2)

2019

2018

2017

2016

23

24

34

34

Average energy consumption in warehouses (kWh/m2)

2019

2018

2017

2016

2019

2018

2017

2016

3843

4325

4856

5616

89

78

88

109

REDUCED ENERGY CONSUMPTIONHemtex’s climate goals include reduced energy consumption in warehouses, stores and offices. Hemtex works systematically to reduce its electricity consumption.

Reduced use of plastic In 2017, Hemtex started charging for plastic bags, with the aim of reducing consumption of the bags. By the end of 2019, the consumption of plastic bags had reduced by 42 per cent. In 2018, every Swedish person consumed 102 plastic bags, a reduction of 11 per cent compared with 2017. Hemtex is working actively towards the 2019 goal of 90 plastic bags per person. By recycling plastic bags so that they are used four times, greenhouse gas emissions are reduced by more than one kilo (calculating that 1kg of plastic requires 2kg of oil). Hemtex has removed the plastic packaging from all products, which saved 35 tonnes of plastic during 2019.

Renewable electricityThe Hemtex head office and about half of the stores in Sweden are part of a shared electricity agreement that provides electricity from renewable hydropower. Electricity consumption data is compiled in a shared system. For other stores, energy consumption has been estimated using the average energy consumption per store. An assumption is made that conventional electricity is used.

The most important step in reducing emissions from energy consumption is to encourage all stores to choose renewable electricity. This review is currently in process. Hemtex is also moving towards more efficient use of store areas, for example by reducing inventory.

Energy-efficient LED light bulbs

Hemtex always installs energy-efficient LED lighting in new stores. In existing stores, the lighting is gradually being transitioned to LED or to light bulbs with lower wattage.

Recycling of cardboardDuring the year, the so-called whole-box packing commenced, which involves goods that are to be delivered to one specific store being co-packed already in Asia. This approach increases the fill rate. Additionally, the large boxes can be reused.

Recycling waste from operationsHemtex’s goal is to recycle as much cardboard, paper and plastic waste as possible from the company’s own operations. The stores sort their waste so that it can be recycled into new products and for other purposes, rather than being sent for burning.A large part of the waste occurs when goods are packaged for onward distribution to the stores. Goods from the manufacturer are often packaged in larger quantities, while each individual store needs a smaller amount. This step takes place at a distribution centre, which discards for recycling about 316 tonnes of corrugated cardboard and approximately 3 tonnes of plastic on behalf of Hemtex.

Conscious choice of materials in new storesWhen new Hemtex stores are opened, conscious material choices are made together with reputable suppliers. If a store is closed, Hemtex always evaluates whether the furnishings can be used in other stores.

Total energy consumption (MW) Distribution of energy sources, %(electricity consumption in warehouses, stores and offices)

• Renewable energy 60%• Fossil fuels 40%

7000

6000

5000

4000

3000

2000

1000

0

• 2015, 6301• 2016, 6117• 2017, 5367• 2018, 4821• 2019, 4298

2015 2016 2017 2018 2019

31

THE USER PHASE

30

STORES & SALES

Clear labelling makes it easier for consumers to

make responsible choicesHemtex endeavours to help customers make sustainable choices. More than 50 per cent of the Hemtex range now carries different “sustainable” labelling.

Standards and certificationsFor greater credibility, Hemtex always indicates why a product is being profiled as more sustainable, for example by stating the standard and certificate number on the label or package.Hemtex’s umbrella brand for sustainability includes:

• Hemtex’s organic cotton that is controlled and certified by GOTS and/or OCS.

• Recycled products controlled and certified by Global Recycled Standard, GRS or Recycled Content Standard, RCS.

• Hemtex down that is controlled and certified by Responsible Down Standard, RDS.

• Cotton labelled with BCI that illustrates that Hemtex supports the Better Cotton Initiative, a system built on mass balance, which means that the same weight of cotton has been grown according to Better Cotton Initiative’s cultivation methods.

• Lyocell, which is a more sustainable fibre with internal processes for control and review.

The concept also includes products that have been grown or produced with less environmental impact than conventional methods and which have been approved by Nordic Swan Ecolabel, Good Environmental Choice, EU Ecolabel or FSC certification of wood and paper products.

The concept is not only a label though, it is also an on-going process into which Hemtex continuously weaves more and more sustainable threads.Hemtex has a common umbrella brand for a number of approved and relevant standards. For a product to be labelled as sustainable, the majority of its content must be manufactured from more sustainably grown raw materials, recycled materials or other more sustainable fibres such as lyocell. The concept also includes products that have been grown or produced with less environmental impact. Good traceability is a pre-requisite for these goods.

PRODUCT USAGEAll Hemtex products should have a long lifespan. To achieve this, continuous improvements are made

based on feedback from customers and follow up of complaints received. Hemtex also collects discarded

products to support increased reuse and recycling and create more circular business models for textiles.

32 33

THE USER PHASETHE USER PHASE

RECYCLING AND CIRCULARITYAll Hemtex products should have a long lifespan. Hemtex endeavours to contribute to more circular business models that are based on circular models for optimal reuse and recycling rather than traditional linear manufacturing. Our ambition is to reduce the utilisation of natural resources, use closed-loop manufacturing to prevent waste and develop more products from recycled raw materials.

In 2019, a total of 40 (10) tonnes of textiles were collected in Hemtex’s stores. This is an increase compared to the previous year. Collection is carried in partnership with I: Collect, (I: CO).The world’s population is growing, and the middle class is expanding. Unsustainable consumption patterns - we consume as if we had 1.7 earths - are leading to more natural resources being used than the planet can manage. This is a societal challenge that requires large-scale change and innovation. Companies, government agencies, organisations and users must work together to begin to deal with the issues and create circular models. Hemtex is part of a working group at Svensk Handel (Swedish Trade Federation) called Textiles for Recycling Initiative (T4RI), focused on finding new solutions for reuse and recycling. The T4RI group aims to find solutions that can simplify collaboration between various groups within textile recycling, such as consumers, producers and municipalities. A circular business model involves resource efficiency in all stages of a product’s life cycle. A doubling of the lifespan of all textiles would almost half the products’ climate impact. In most cases, recycling is more resource-efficient than producing new products with virgin raw materials, but recycling should be the last step after the product’s lifetime has been maximized. Long-lasting home textilesHemtex has high quality standards and the company aims to make long-lasting home textiles which often become more comfortable and beautiful with use. Hemtex also aims to increase the proportion of products from sustainable sources and guides customers to more sustainable and conscious choices.

Increased recycling of textilesEvery year, 7.5 kg of textiles per person are thrown away, in Sweden alone. Over 120,000 tonnes of new textiles enter the Swedish market, but only just under 5 per cent is recycled. To increase recycling and more circular

models, Hemtex collects used textiles. The company’s ambition is to increase reuse and recycling.

Most of Hemtex’s products are made of pure raw material with the minimum amount of fibre blending possible and with very few details and accessories. Our hope is that that these relatively clean products will facilitate recycling when the products can no longer be used and are about to be discarded.

60 percent of the textiles collected through I:CO are in such good shape that they can be reused in their existing condition. These are sorted and sold on the global second-hand markets in several countries. 34 percent of the collected products are recycled and become new products. Only a small portion of the textiles cannot be reused or recycled, and they are instead used to produce energy.

Product responsibility for recycling As part of producer responsibility for electrical products, Hemtex has a take-back system in the Swedish stores where obsolete electrical appliances can be handed in free of charge when customers buy a new equivalent product. Information about this is available for customers in stores and Hemtex hands over electrical items to an approved collection system.

Hemtex also reports the number of electrical products manufactured and imported to El-Kretsen, thus contributing to the financing of El-Kretsen’s national collection and recycling system. A similar system exists in Finland where Hemtex reports to Elker.

Hemtex takes responsibility for collecting and recycling consumers’ product packaging, to the extent possible. The company pays a packaging fee to FTI (Packaging and Paper Collection), helping to fund over 5,000 recycling stations around Sweden where consumers can take their packaging for recycling. Hemtex reports its

PRODUCT USAGE


expected quantity of waste quarterly to FTI. In Finland the company reports the use of packaging to PYR and in Estonia to the Estonian authorities.

Reduced use of plastic bagsMost bags are used only a few times, but it takes nature more than 400 years to break them down. Meanwhile, they disintegrate into small pieces and can cause harm to both animals and humans. In addition, bags are very energy-intensive to manufacture, transport and recycle, even if they are made from renewable materials like paper.

In 2017, Hemtex started charging for plastic bags, with the aim of reducing consumption of the bags. By the end of 2019, the consumption of plastic bags had reduced by 42 per cent. In 2018, every Swedish person consumed 102 plastic bags, a reduction of 11 per cent compared with

2017. Hemtex is working actively towards the 2019 goal of 90 plastic bags per person. By recycling plastic bags so that they are used four times, greenhouse gas emissions are reduced by more than one kg (calculating that 1 kg of plastic requires 2 kg of oil).

The material is renewable and also recyclable, which means that the bag can be sorted and recycled as new plastic. The growing of the sugar canes used in producing the material is controlled and does not compete with the farming of other foodstuffs.

During the year, Hemtex has also implemented another measure to reduce the use of plastic. Plastic packaging from around all products has been removed, saving 35 tonnes of plastic during 2019.

As part of Hemtex’s product responsibility, the company policy is to not sell disposable plastic goods.

Sustainability issues must be integrated

into daily activities

34 35

EMPLOYEESEMPLOYEES

INCREASED COMPETENCE DEVELOPMENT

Hemtex was named 2019 Employer of the year for its ongoing investment in its employee skills development. The year was also characterised by the merger with the home textile retail chain Kid ASA.

The listed Norwegian company Kid ASA acquired Hemtex on 15 May 2019 the objective of creating a leading Scandinavian home textile retail chain. To gain synergies, Hemtex’s purchasing and range management functions were centralised under Kid, with the exception of the Hemtex24H concept. In October, 16 employees were made redundant from the Hemtex head office in Borås. The redundancies were carried out in discussion with each employee and with the trade union Unionen as a negotiating partner. In conjunction with the redundancies, transition support has been offered to all permanent employees through Trygghetsrådet.

Investing in trainingHaving skilled employees is one of Hemtex’s most important competitive advantages. During the year, the training portal Hemtex Academy launched a new online course intended to increase knowledge about Hemtex’s omnichannel offering and raise understanding of how the stores and online shopping create valuable synergies. Earlier online courses include Hemtex’s core values, stress management and GDPR. All store assistants undergo introductory training in sales, customer service and safety awareness, and participate continuously in sales and customer service training while employed. Several new online courses for store employees are in development. In 2019 Hemtex launched a new online onboarding programme for new employees at the head office. Employees also participate regularly in workshops, lectures and tailored training days.

Employer of the yearDuring the year, Hemtex was named Employer of the year during the Retail Awards, which is organised by the Swedish Trade Federation. An excerpt from the justification: “Hemtex has responded to the on-going structural transformation of the retail sector with a holistic approach to its employees. Through Hemtex Academy the core values of the company are embedded internally. Here, organisational key words such as “flexibility” and “customer focus” are transformed into concrete tools that each person can bring with them into the new paradigm.”

Focus on health and safetyThe goal of Hemtex’s workplace environment efforts is ultimately to prevent ill health and absence related to shortcomings in working conditions and the workplace environment.Hemtex encourages employees to do more physical

Hemtex’s values are generosity, knowledge and creativity.

Employee survey average result per year

4,1

4,0

3,9

3,8

3,7

3,62010 2011 2013 2014 2016 2018

3,86

3,80

3,85

3,86

3,994,04

Core values and customer promise

These core values guide all employees in all business activities. They will facilitate correct prioritisation and decision-making thereby increasing internal efficiency.An approach that is shared by all employees, creates the right experience of Hemtex and strengthens relationships with customers. The three core values also form the foundation of the Hemtex customer promise.

You will always experience that we are specialists in interior decoration.

You will always experience that it is our pleasure to help you.

You will always experience that you get inspiration for a wonderful home.

KNOWLEDGE

CREATIVITY

GENEROSITY

Hemtex’s ability to attract, recruit, develop and retain the right employees is crucial for the company’s progress. Hemtex wants to offer employees opportunities for

development and a stimulating, safe and healthy workplace environment.

EMPLOYEES

Fotograf: Gustaf Olsson

36 37

EMPLOYEESEMPLOYEES

year relative to the average number of employees in the group.

Trade union agreements and dialogueAll Hemtex’s employees in Sweden and Finland are covered by collective agreements. In Estonia the national guidelines on collective agreements are followed. Hemtex is a member of the employers’ organisations operating in the various countries and the company maintains a continuous dialogue with the unions. Hemtex adheres to the notice periods specified in the collective agreements of the Swedish Trade Federation, the Union of Commercial Employees and Unionen.

Hemtex offers all employees, both part-time and full-time, benefits in accordance with the local laws in all countries where it operates. These include occupational health, insurance for occupational injuries and illness, parental leave and retirement benefits.

In the Hemtex organisation the store managers report to a regional manager, who in turn reports to the Hemtex store operation manager. The HR department is responsible for personnel issues, central initiatives and activities and for supporting the stores.

activity and adopt a balanced lifestyle, for example by offering health and wellness benefits and through agreements with fitness and wellness providers.Sick leave at Hemtex is relatively low. In 2019, the total sick-leave rate was 3.74 (3.9) per cent, which is a decrease of 0.16 (1.1) per cent compared to the previous year.Hemtex stores should be a safe and secure place for customers and employees. This is why it is essential that all employees have knowledge and understanding of current safety issues. This is achieved through recurrent training and information.Hemtex works preventively and systematically with fire safety and the workplace environment. Risk assessments related to intimidation and violence in the company are conducted continuously at a local and central level. If an incident occurs, there are crisis management organisations in every region which can directly support staff in need of help.Every year, workplace environment inspections must be carried out in offices and in every store. Any shortcomings discovered lead to concrete action plans and goals, and sometimes to key initiatives that encompass the entire business.In 2019, one incident and five workplace accidents were reported, but with no resulting serious injuries. All reported incidents and injuries are compiled and followed up by the HR Manager.Hemtex has zero tolerance for any form of discrimination or harassment and has developed guidelines for how work to prevent harassment will be addressed in the company. No cases of harassment have been reported within the organisation during the year.

Increased full time rateThe composition of Hemtex’s employees largely reflects the company’s customer base. The majority of employees, about 97 per cent, are women and the average age of employees is 38 years. The company’s management team consists of 67 per cent women.In 2019, the number of employees was 703 (738), 488 (548) of these were part-time. This means that 69 per cent of employees work part-time.Hemtex endeavours to offer part-time employees as high a rate of employment as possible. This is beneficial to both the individual and the company and leads to a lower employee turnover. Hemtex has a simple digital staffing system, which gives priority to people who are already employed when there is a need to staff extra shifts. The system is also used by external temporary staff. This has greatly simplified the staffing process for managers and created a better working environment for all. Hemtex has also introduced a new scheduling and time reporting system in the stores, which makes it simpler to adapt staffing in the stores to customer needs.

Employee turnoverEmployee turnover was 26 (20) per cent, based on the number of permanent employees who left during the

Form of employment:

• Part-time employees 69%• Full-time employees 31%

Gender distribution, all employees and management levels, %(Women/men)

Total

All management levels

• Women • Men

Gender distribution in the management team

• Women 71%• Men 29%

Share of employees by age group, %

• Up to 20 years 1%• 20-29 years 34%• 30-39 years 27%• 40-49 years 16%• 50-59 years 17%• Over 60 years 5%

96/4

96/4

38 39

SUSTAINABILITY GOVERNANCESUSTAINABILITY GOVERNANCE

GOVERNANCE OF SUSTAINABILITYThe company’s CEO has the ultimate responsibility for Hemtex’s sustainability work, and strategic decisions are taken in the management team. Sustainability issues must be integrated into daily activities, such that all employees take responsibility for the impact of their own work. Hemtex was previously a wholly owned subsidiary of the ICA Group. On 15 May 2019, the listed Norwegian company Kid ASA acquired Hemtex.

COLLABORATION AND MEMBERSHIPS

Memberships and initiatives which Hemtex participates in:

• Accord on Fire and Building Safety in Bangladesh (Bangladesh Accord)• Better Cotton Initiative (BCI)• Business Social Compliance Initiative (BSCI) through our owner ICA Group• The chemical group at RISE• Trade Safety Group, Swedish Trade Federation• Swedish Textile Importers• Sweden Textile Water Initiative (STWI)• Swedish Textile Initiative for Climate Action (STICA)• T4RI, Textiles for Recycling Initiative, Swedish Trade Federation• Partnership with SOS Children’s Villages• OEKO-TEX®• Forest Stewardship Council (FSC)

In addition to industry organisations in each market, some of Hemtex’s key partners in sustainability are:

• Textile Exchange• Textile Exchange• Swedish Environmental Protection Agency• Swedish Environmental Protection Agency• Swedish Chemical Inspection Agency• Swedish Chemical Inspection Agency• Roundtable of Sustainable Palm Oil (RSPO)• Roundtable of Sustainable Palm Oil (RSPO)• Responsible Down Standard (RDS)• Responsible Down Standard (RDS)• International Down and Feather Testing (IDFL)• International Down and Feather Testing (IDFL)• GOTS, Global Organic Textile Standard• GOTS, Global Organic Textile Standard• Nordic Swan • Nordic Swan • Asthma and Allergy Association• Asthma and Allergy Association• Forest Stewardship Council (FSC)• Forest Stewardship Council (FSC)• I:Collect• I:Collect

ETHICS - A CONTINUOUS THEME

To create a shared vision and clear basic rules for business relationships, Hemtex applies the same policy to its employees as to external contacts. Hemtex suppliers contractually commit to comply with the company’s ethics policy.

Hemtex’s ethics policy provides clear guidance on how parties should react to situations in which gifts, samples, trips, discounts or other benefits are offered.

Hemtex does not provide grants or donations, directly or indirectly, to politicians, political parties or organisations acting in the political sphere.

Focus on high-risk countriesHigh-risk operations are mainly suppliers in high-risk countries and the staff at the group purchasing office IGS in Asia. High-risk countries are defined according to the BSCI definition (Business Social Compliance Initiative).

All staff at IGS undergo regular training in ICA Good Business Ethics and receive information when recruited that IGS in Asia has zero tolerance regarding the receiving of gifts. Suppliers are also informed about the IGS policy. IGS is also certified in accordance with ISO 9001 and ISO 14001 standards.

In 2019 Hemtex was not subject to any legal action nor sentenced to pay fines at any time.

Personal privacySince May 2018, Hemtex has been working according to the new European General Data Protection Regulations (GDPR). Hemtex’s processing of personal data includes both technical and organisational measures aimed at securing the personal data of both customers and our own employees.

The Data Protection Officer conducts internal audits once per quarter. Hemtex’s Data Protection Officer is also part of the ICA Group’s new Legal Office. Hemtex’s working methods, policies and instructions are governed by and originate from its main owner, ICA.

During the year, there have been no reported incidents of deficiencies in the protection of customer privacy.

Hemtex works in a manner that is consistent with international and national laws and regulations of the countries where it operates. Counteracting corruption and bribery is an ongoing process which requires cooperation, consensus and a joint strategy

40 41

SUSTAINABILITY GOVERNANCESUSTAINABILITY GOVERNANCE

A PARTNER TO SOS CHILDREN’S VILLAGES - FOR A SAFE UPBRINGING AND THE RIGHT TO EDUCATION

Hemtex is proud to be a partner of SOS Children’s Villages. In SOS Children’s Villages, vulnerable children get the chance of a safe upbringing. The family-strengthening programme works to prevent families from separating due to poverty and illness. The goal is to keep families together so that children do not lose the care of their parents. Often, small efforts can make a big difference to a child’s future.

Collaboration between Hemtex and SOS Children’s Villages began as early as 2004. Hemtex has made major investments primarily in the family-strengthening programmes in Bangladesh, which has secured many children’s present and future.

Liza and her mother are part of SOS Children’s Villages’ family-strengthening programme in Chattogram, Bangladesh. When Liza was two years old her parents separated. Both parents remarried fairly quickly but after just one year, Liza’s step-father abandoned the family. Liza was alone with her mother and they lived together in the Halishahar slum area, where her mother worked as a housekeeper. They came across the family-strengthening programme in Chattogram in 2009. Their lives have improved significantly since then and they have received help with Liza’s schooling and healthcare. Liza dreams of becoming a teacher and educating poor children.

Photo: SOS Arcive

A total of 36,600 children’s dressing gowns sold, raising

SEK 366,000 for SOS Children’s Villages

RISKS AND RISK MANAGEMENTTo ensure a good overview of the risks to which the business is exposed, Hemtex works systematically to identify, analyse, evaluate and manage risks.

Risks and unwanted events which are deemed to potentially weaken confidence in the business are to be prevented. If an unwanted event occurs, despite preventive measures, damage-mitigating actions should be in place. The risk management process includes regular identification, analysis and follow-up of the company’s biggest risks. In addition, risk analyses are carried out on an ongoing basis in connection with larger projects, significant changes in operations and major investments, as well as being an integral part of sustainability work.

The Risk Management Committee, led by the Group’s management teams, has overall responsibility, through guidance and governance, for ensuring that the Group has an overview of its risks, for reporting significant changes in the risk profile, and for ensuring that risk management work is carried out in a coordinated and efficient manner within each business area.

RisksThe growing awareness of climate change in society will most likely result in new laws and regulations that will affect Hemtex’s operations.

For example, restrictions on climate-impacting emissions and amended or new taxes on energy production are likely to impose changes. Climate change can also cause temperature changes, droughts, floods, and similar, which may mean that access to, and costs of, raw materials can change.Customers’ consumption patterns may also change due to a growing awareness of climate change.

OpportunitiesNew external demands drive innovation and development of a product range which takes into account climate and environmental impact. Being better than our competitors at responding to future changes is an opportunity to stay ahead.

As customer demand for climate and environmentally friendly products increases, Hemtex will also be able to identify new business opportunities. This may involve developing new products or services. By converting to renewable energy sources and minimising resources, Hemtex can ensure a competitive business without fossil fuels and other resources should their availability decrease. Reducing energy consumption and waste is also a way to reduce costs.

43


42

GRI INDEX

DETAILED SUSTAINABILITY INFORMATIONThis sustainability report is one of Hemtex’s channels for communicating to the outside world about how its work on sustainability is managed and is progressing. An annual environmental and sustainability report has been published (by the company) since 2010. The report covers the Hemtex financial year, and this report includes the period from 1 January 2019 to 31 December 2019. The previous report was published in March 2019. This sustainability report has been prepared in accordance with the GRI Standards (Core option).Hemtex carries out analyses of the most essential material topics for the company and its sustainability

work. These analyses form the basis for the areas to be focused upon and for how this work is reported, read more on page 44.Hemtex’s ambition is for the sustainability report to reflect stakeholders’ expectations, and also provide an overall picture of the company’s social and environmental impact in the value chain. It is hoped that the report also clarifies how Hemtex works with the UN Global Sustainable Development Goals (SDG) and the principles of the UN Global Compact (UNGC), read more in the GRI index on page 47.

Identified material topics as well as impact on the value chain:

Product development

Manufacturing TransportationStores and

salesProduct usage

ECONOMIC TOPICAnti-corruption • •ENVIRONMENTAL TOPICSMaterials • •Energy • •Water • • •Emissions • • • •Effluents and waste • • •Recycling • • •SOCIAL TOPICSEmployment • •Labour/Management

relations• •

Health and safety • •Diversity and equal

opportunity•

Non-discrimination • •Freedom of association

and collective bargaining• •

Child labour •Forced or compulsory

labour•

Human rights

assessment•

Supplier social

assessment•

Customer health and

safety• •

Customer privacy • •Product safety • • •

DIALOGUE WITH STAKEHOLDERS

CustomersHemtex’s store staff and customer service are the most often-used channels of communication with customers, while other channels, such as Instagram and Facebook are becoming increasingly important. The Hemtex customer club, Studio Hemtex, has over 1.8 million members and is important for creating a stronger relationship with customers. Customer surveys are conducted regularly, with questions about everything from the product range and sustainability, to marketing and customer service, in order to receive feedback and suggestions for improvements. Most questions from customers are related to Hemtex’s products, such as chemical content, sustainable fibres, certificates, manufacturing processes, working conditions in factories and the function of the product.

Suppliers and sub-contractorsHemtex pursues long-term and transparent relationships with suppliers. There is a well-developed monitoring system in place to ensure social, environmental and quality aspects. The forum for dialogue is mainly through central and local supplier meetings, supplier visits and regular contact. Hemtex and its suppliers also participate together in initiatives focused on sustainability issues. Key issues for the suppliers mainly include responsible purchasing, social responsibility and health and safety.

Employees and potential employeesHemtex’s ability to attract, recruit, develop and retain the right employees is crucial for the company’s progress. Hemtex wants to offer employees opportunities for development and a stimulating, safe and healthy workplace environment. Employee surveys are conducted regularly to capture issues that are important to the employees. These primarily involve the workplace environment, well-being and leadership.

OwnersHemtex’s overall goal is to create long-term, increasing value for owners with good profitability, strategic sustainability work and responsible behaviour in all situations. Kid ASA holds regular strategy and follow-up meetings together with Kid Interiör and Hemtex. Information is provided to the owners primarily via the parent company, KID ASA, and is distributed at the Annual General Meeting, shareholder meetings, seminars, individual meetings and via reports on financial development and sustainability. The main issues primarily concern responsible actions

from the management and Board, long-term profitability and strategic sustainability work.

Local communitiesHemtex does not own any factories, instead it works with suppliers, primarily in Asia, to manufacture the products sold in the stores. The company thus contributes to employment locally and by placing demands on suppliers, also ensures that their employees have reasonable salaries and employment terms, which contributes to the development of the local community. Hemtex is also a partner of SOS Children’s Villages and primarily supports family-oriented work in Bangladesh, which is the company’s second largest market for purchasing.The most important issues concern the development of the local community, reasonable wages and working conditions, and local jobs.

Industry associations, academia & science, government agencies and other stakeholdersHemtex participates continuously in various forums for dialogue with trade associations, government agencies, student associations and other interest organisations and similar, through networking, workshops, lectures and direct dialogue. The issues that are of greatest interest in these contexts are primarily responsible purchasing, human rights, health and safety and climate impact.

Hemtex endeavours to collaborate with different parties and initiatives to jointly influence and address some of the major challenges in the industry. The stakeholders that are deemed to have the greatest impact on, and are most affected by, the company’s business are as follows:

45

SUSTAINABILITY GOVERNANCE

44


Materiality matrix

ECONOMIC TOPICS1. Economic performance2. Market presence3. Indirect economic impacts4. Procurement practices5. Anti-corruption

ENVIRONMENTAL TOPICS 6. Materials7. Energy8. Water9. Biodiversity 10. Emissions11. Effluents and waste12. Environmental compliance13. Supplier environmental assessment

SOCIAL TOPICS14. Employment15. Labour/Management relations16. Health and safety17. Education18. Diversity and equal opportunity19. Non-discrimination20. Freedom of association and

collective bargaining21. Child labour22. Forced or compulsory labour23. Security practices24. Rights of indigenous peoples25. Human rights assessment26. Local communities27. Supplier social assessment

28. Public policy29. Customer health and safety30. Marketing communication31. Customer privacy32. Socio-economic compliance33. Product safety34. Recycling

Significant economic, environmental or social impact

Sig

nific

ant i

mpa

ct fo

r ext

erna

l sta

keho

lder

s

12

3

4

5

6

7

8

9

10

11

12

13

34

1415

16

17181920

2122

2324

25

26

27

28

29

30

31

33

32

At the end of 2017, Hemtex carried out a materiality analysis based on the guidelines of the GRI Standards in order to define which issues have significant economic, environmental or social impact and which issues have a significant impact on stakeholders.

The analysis was performed with contributions from internal employees as well as representatives of several stakeholder groups.The material topics identified are illustrated in the table below and their impact on the value chain.

Hemtex continuously carries out analyses of the most essential material topics for the company and its sustainability work. These analyses then form the basis for areas to be focused upon and for how this work is reported.

MATERIALITY ASSESSMENT

34

CALCULATION METHODS

This sustainability report encompasses Hemtex AB and its content is based on the materiality analysis performed during the year. The following provides detailed information on measurement and calculation methods for this sustainability report.

For group key ratios and performance indicators, data is collected in an IT system for Group sustainability issues. The system supports ongoing reporting and aims to ensure long-term quality of the indicators used in continuous monitoring as well as for reporting on sustainability work at Group level.Other key ratios, performance indicators and data are verified from Hemtex’s business system and/or third-party traceability systems.

Energy consumptionThe head office and just over half of the stores in Sweden are part of a shared electricity agreement and use electricity from renewable sources. Electricity meters are connected to a shared system that compiles data on electricity consumption. For those stores that are not part of Hemtex’s central agreement, energy consumption has been estimated using the average energy consumption per store. There is no data on the type of electricity used for these stores either, so an assumption has been made that it is conventional electricity.

The district heating used in warehouses is estimated based on the space used by Hemtex on the premises. Electricity used for lighting is calculated in the same way, including the amount the truck park uses on Hemtex’s behalf.

For the calculation of energy consumption per square meter in warehouses, stores and offices, the area of the active stores and warehouses at the end of the measurement period are used.

Freight transportationThe group-wide goal of climate neutrality by 2020 includes freight transportation between Hemtex’s warehouses and stores. All freight carriers report fuel consumption, which is calculated based on the distance travelled on behalf of Hemtex, as well as the average fuel consumption and type of fuel of the carrier.

Data for freight import i.e. from the supplier to the Hemtex warehouses, is calculated based on reported data from the carrier used. Greenhouse gases are reported from carriers and are based on average fuel consumption and type of fuel. Greenhouse gases for a small proportion of air freight has not been reported. In these few cases, the average greenhouse gas for the majority of air freight has been used for the calculation of

the remaining air cargo.

Business travelCovers business travel booked through Hemtex’s central travel agency and registered car journeys.

Climate neutralHemtex has adopted the Group-wide goal of being climate neutral by 2020. This means that Hemtex will reduce its climate impact as much as possible by 2020, compared with the base year of 2006. Remaining emissions will be offset using emission allowances. This comprises emissions from energy consumption in stores, warehouses and offices, and for freight transportation between warehouses and stores and from business travel (scope 1, 2 and parts of scope 3). Climate neutral means that the net greenhouse gas emissions must be zero. This is in line with the Swedish Environmental Protection Agency’s definition.

Climate impactAt the beginning of 2017, Hemtex decided to adopt the ICA Group’s climate target. This target had been established by the ICA Group using the Science-Based Targets method as well as the GHG Protocol Corporate Accounting and Reporting Standard. 2006 is a fixed base year for emission factors. For any new energy and fuel types introduced after 2006, emission factors are set in accordance with the IPCC’s recommendation. In this report Hemtex’s decrease in direct greenhouse gas emissions is reported per square meter of the total area in stores and warehouses. This is done to increase transparency and accuracy as the outcome will follow changes within the business.

Emissions under the GHG Protocol include the following in each scope:Scope 1: Emissions from business travel using leased

company vehicles.Scope 2: Emissions from energy in warehouses,

Hemtex’s own stores and officesScope 3: Emissions from business travel, emissions

from Swedish Hemtex stores not owned by Hemtex, emissions from shipments between warehouses and stores.

The following emission factors are used to calculate carbon dioxide emissions:• Emissions factor for the 2006 Nordic electricity mix for conventional electricity in Sweden.

47

GRI INDEX

46

SUSTAINABILITY GOVERNANCE

• Swedish average from the Swedish Energy Agency for district heating (in accordance with the recommendation from the GHG Protocol).• Emissions factor for diesel and ethanol from the Network for Transport Measures (NTM - Nätverket for Trafik och Miljö).• Carbon dioxide emissions from air travel and train journeys are provided by Hemtex’s travel agency.• GHG Protocol emission factor for business travel by car.• Alternative fuels from the various carrier companies, base year 2012 and 2016.

Supplier-related dataQuality certified suppliers include all suppliers of Hemtex own-brand products which have undergone an audit and hold a valid ISO 9000 or ICA Quality Audit certificate.

Information on socially audited suppliers refers to active suppliers of Hemtex own-brand products in high-risk countries whose manufacturing units have undergone a social audit in line with ICA Social Audit and/or third-party audits conducted by BSCI, ETI, SMETA or SA8000. To be approved, the audit result must meet the ICA Group’s minimum level i.e. that the audit has not identified any of the zero tolerance criteria decided on. Nor must the audit identify that the lowest-rated producers have not improved in the follow-up audit, and that the supplier should commit to implementing any improvement measures. Production unit refers to factory. Since 1 January 2014, high-risk countries have been defined in accordance with the BSCI definition (Business Social Compliance Initiative).

Number of products and purchasesPurchase value and number of purchased products include all products in Hemtex’s core range, unique products found in franchise stores are not included.

The sustainable choices include; organic products with GOTS certification, cotton which supports sustainable farming methods and which has been mass balanced and allocated to Hemtex with Better Cotton Claim Units, recycled products with GRS or RCS certification, down products with RDS certification, products with Lyocell fibres or products with other environmental labelling, such as Nordic Swan ecolabel, EU Ecolabel, Good Environmental Choice, and FSC.

Cotton from more sustainable sources comprises Hemtex own-brand products and includes organic cotton products with GOTS certification, cotton which supports sustainable farming methods, and which has been mass balanced and allocated to Hemtex with Better Cotton Claim Units, recycled cotton products with GRS or RCS certification.

EmployeesThis report covers Hemtex’s employees (i.e. store staff where the shop is owned by Hemtex). Data is based on the number of employees at the end of the year, with the exception of Gender distribution, which is based on the average number of employees during the year. The average number includes permanent employees,

employees in their probationary period and temporary employees (more than one month).Employee turnover is calculated as the number of permanent employees who left during the year in relation to the average number of permanent employees. Sick leave is calculated as the number of hours of sick leave in relation to scheduled working hours.Gender distribution for all management levels refers to all managers with responsibility for staff within the Group. Type of employment refers to the total number of employees divided by those who work full time, 100 per cent, and those who work part-time i.e. less than 100 per cent. Permanently employed staff refers to employees employed for an indefinite period or those in their probationary period regardless of their degree of employment, as of December. Temporary employment refers to employees whose employment is for a limited term. Outsourced operations and staffing consultants are not included.

Climate impact in the value chainThe climate impact from the various parts of the value chain is based on data in a report from Mistra Future Fashion ”Environmental assessment of Swedish clothing consumption - six garments, sustainable futures” by Gustav Sandin, Sandra Roos, Björn Spak, Bahareh Zamani and Greg Peters. Using life cycle analysis (LCA), the report has calculated the total greenhouse gas emissions resulting from textiles consumed in Sweden.Hemtex has made the following assumptions for the different parts of its value chain:The report is based on clothes and it is assumed that this also applies to the Hemtex’s product range.Product development and choice of materials has been derived from fibre manufacturing in Swerea’s report, i.e. a total of 16 per cent of the climate impact of textile consumption. For manufacturing, 64 per cent in total, Hemtex has included yarn manufacturing, fibre manufacturing, wet treatment, sewing and transportation in manufacturing. Distribution and retail stands for 3 per cent. Stores and sales comprise consumer transport of 11 per cent. The product usage phase includes washing and drying and the final usages phase stands for 7 per cent.

GRI INDEXGRI-NO DISCLOSURE SDG UNGC COMMENTS PAGE

GRI 101 FOUNDATION 2016

GRI 102 GENERAL DISCLOSURES 2016

ORGANIZATIONAL PROFILE

102-1 Name of the organization. 3

102-2 Activities, brands, products and services. 3

102-3 Location of headquarters. 3

102-4 Location of operations. 3

102-5 Ownership and legal form. 3

102-6 Markets served. 3

102-7 Scale of the organization. Total assets - confidential information. 3

102-8 Information on employees divided by type of employment, terms, region and gender.

5, 8 3-6 35-37

102-9 Supply chain. 22

102-10 Significant changes to the organization and its supply chain.

No significant changes affecting the scope or boundaries of the report.

-

102-11 Precautionary principle or approach. 41-42

102-12 External initiatives 17 38

102-13 Membership of associations 17 38

STRATEGY

102-14 Statement from senior decision-maker (CEO) 4

ETHICS AND INTEGRITY

102-16 Values, principles, standards and norms of behaviour

12 1, 7, 10 7-8, 11, 21, 35, 39

GOVERNANCE

102-18 Corporate governance Hemtex’s Management board consists of 6 people including 2 men and 4 women.

38

STAKEHOLDER ENGAGEMENT

102-40 List of stakeholder groups 43

102-41 Collective bargaining agreements 8 3 22, 37

102-42 Identifying and selecting stakeholders 43-44

102-43 Approach to stakeholder engagement 43-44

102-44 Key topics and concerns raised 42-44

REPORTING PRACTICE

102-45 Entities included in the report Hemtex Ltd. unless otherwise stated

102-46 Defining report content and topic boundaries 42-44

102-47 List of material topics 42-44

102-48 Restatements of information Minor adjustments have been made.This is reported through commentsin connection with the data reported.

102-49 Material changes in reporting No material changes

102-50 Reporting period 42

102-51 Date of most recent report 42

102-52 Reporting cycle 42

102-53 Contact person for questions regarding the report

Anna Bredberg, Purchasing Director.

102-54 Statements of reporting in accordance with the GRI Standards

42

48 49

GRI INDEXGRI INDEX

GRI-NO DISCLOSURE SDG UNGC COMMENTS PAGE

102-55 GRI content index 47-51

102-56 External assurance 2

GRI 200 ECONOMIC STANDARDS 2016

ANTI-CORRUPTION

103-1 Explanation of the material topic and its boundaries

16 10 39

103-2 Management approach and its components

16 10 39

103-3 Evaluation of the management approach 16 10 39

205-1 Operations assessed for risks related to corruption

16 10 39

205-2 Communication and training about anti-corruption policies and procedures

16 10 39

205-3 Confirmed incidents of corruption and actions taken

16 10 39

GRI 300 ENVIRONMENTAL STANDARDS 2016

MATERIALS


12 7-9 13


12 7-9 13

103-3 Evaluation of the management approach 12 7-9 13

301-1 Materials used by weight or volume 12 7-9 13

302-2 Recycled input materials used 12 7-9 14, 32

302-3 Reclaimed products and their packaging materials

12 7-9 32

ENERGY


7, 13 7-9 20, 28


7, 13 7-9 20, 28

103-3 Evaluation of the management approach 7, 13 7-9 20, 28

302-1 Energy consumption within the organization 7, 13 7-9 23, 28-29

302-2 Energy consumption outside the organization 7, 13 7-9 20, 28

302-3 Energy intensity 7, 13 7-9 28-29

302-4 Reduction of energy consumption 7, 13 7-9 20, 28

302-5 Reductions in energy requirements of products and services

7, 13 7-9 20

WATER


6, 12 7-9 13, 20


6, 12 7-9 13, 20

103-3 Evaluation of the management approach 6, 12 7-9 13, 20

Own indicator; reduced water consumption outside the organization

6, 12 7-9 20

EMISSIONS


12, 13 7-9 9


12, 13 7-9 9


103-3 Evaluation of the management approach 12, 13 7-9 9

305-1 Direct (Scope 1) GHG emissions 12, 13 7-9 9-10

305-2 Energy indirect (Scope 2) GHG emissions 12, 13 7-9 9-10

305-3 Other indirect (Scope 3) GHG emissions 12, 13 7-9 9-10

305-5 Reduction of GHG emissions 12, 13 7-9 9-10

EFFLUENTS AND WASTE


12, 13 7-9 32

103-2 The management approach and its components

12, 13 7-9 32

103-3 Evaluation of the management approach 12, 13 7-9 32

306-2 Waste by type and disposal method 12, 13 7-9 32-33

GRI 400 SOCIAL STANDARDS 2016

EMPLOYMENT


8 3-6 35


8 3-6 35


401-1 New employee hires and employee turnover 8 3-6 36-37

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

8 3-6 36-37

LABOUR/ MANAGEMENT RELATIONS


8 3-6 37


8 3-6 37


402-1 Minimum notice period in conjunction with operational changes

8 3-6 37

OCCUPATIONAL HEALTH AND SAFETY

103-1 Explanation of the material topic and its 8 35-36


8 35-36

103-3 Evaluation of the management approach 8 35-36

403-1 Workers representation in formal joint management-worker health and safety committees

8 35-36

403-2 Types of injury and rates of injury, occupational illnesses, lost days and absenteeism, and number of work-related fatalities

8 35-36

DIVERSITY AND EQUAL OPPORTUNITY


5, 8 6 35-36


5, 8 6 35-36

103-3 Evaluation of the management approach 5, 8 6 35-36

405-1 Diversity of governance bodies and employees 5, 8 6 Reported by gender and age 36

Non-discrimination


8 6 21, 36

50 51

GRI INDEXGRI INDEX



8 6 21, 36

103-3 Evaluation of the management approach 8 6 21, 36

406-1 Incidents of discrimination and corrective actions taken

8 6 No reported cases -

FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING


8 3 22, 37


8 3 22, 37

103-3 Evaluation of the management approach 8 3 22, 37

407-1 Operations and suppliers in which the right to freedom of association and collective bargaining

8 3 21-22, 37

CHILD LABOUR


4, 8 5 21-22


4, 8 5 21-22

103-3 Evaluation of the management approach 4, 8 5 21-22

408-1 Operations and suppliers at significant risk for incidents of child labour

4, 8 5 21-22

FORCED OR COMPULSORY LABOUR


8 4 21-22


8 4 21-22

103-3 Evaluation of the management approach 8 4 21-22

409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour

8 4 21-22

HUMAN RIGHTS ASSESSMENT


8, 12 1-2 21-22


8, 12 1-2 21-22

103-3 Evaluation of the management approach 8, 12 1-2 21-22

412-1 Operations that have been subject to human rights reviews or impact assessments

8, 12 1-2 21-22

412-2 Employee training on human rights policies or procedures

8, 12 1-2 548.5 hours -

412-3 Significant investments and investment contracts that include human rights clauses or that underwent human rights screening

8, 12 1-2 21-22

SUPPLIER SOCIAL ASSESSMENT


8, 12 1-6 21-22


8, 12 1-6 21-22

103-3 Evaluation of the management approach 8, 12 1-6 21-22

414-1 New suppliers that were audited using social impact criteria

8, 12 1-6 21-22

414-2 Negative social impacts in the supply chain and actions taken

8, 12 1-6 21-22


CUSTOMER HEALTH AND SAFETY


12 18-19


12 18-19

103-3 Evaluation of the management approach 12 18-19

416-1 Assessment of the health and safety impacts of product and service categories

12 18-20

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services.

12 19

MARKETING AND LABELLING


12 29


12 29

103-3 Evaluation of the management approach 12 29

417-1 Requirements for product and service information and labelling

12 29

417-2 Incidents of non-compliance concerning marketing communications

12 29

CUSTOMER PRIVACY


12 1-2 39


12 1-2 39


418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data

12 1-2 39

UNGC = United Nations Global Compact. The UN Global Compact is 10 international principles on human rights, labour rights, environment and corruption for businesses.

SDG = Sustainable Development Goals. UN’s 17 global goals for sustainable development, also referred to as the 2030 Agenda

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