CSR REPORT2017

The Group's CSR policy was firstly built on an ambition to better respond to stakeholder questions and concerns. Then, through progressive structuring in 2015 we embarked on an approach of compliance, reducing any negative impacts. For each of these key challenges we have set up teams and rolled out actions. This report tells us how things are progressing.

We are, however, convinced that this approach is not enough. We must question the very essence of our business models and organisation throughout the value chain to meet the environmental and social challenges facing our sector.

Our ambition is to integrate this major sustainability transformation in two aspects of our business: as fashion stakeholders and as retailers.

2017 marked a turning point in our CSR policy and 2018 has begun with the ambition to build a new trajectory for more sustainable growth.

ESTABLISHINGA NEW TRAJECTORY FOR SUSTAINABLE GROWTH

2013-2014CSR: responsive/

defensive

2015-2017CSR:

compliance

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2018-2025Integrated CSR:

for innovation and new business models

OUR BUSINESS MODELTHE ERAM GROUP DESIGNS, BUYS AND SELLS FASHION ITEMS.

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12 affordable fashion brands

RETAILERS

Businesses (Style, Purchasing, Marketing, etc.) that use support departments (Finance, HR, Legal, IT, etc.).

1 main head office at the historic St-Pierre-Montlimart site

4 Parisian head officesHeyraud - Dresco - Mellow Yellow - Faguo

Production sites

2 factories in France: 300 people

Two offices in Asia: 260 people close to the production sites

(Clothes - Shoes)

10 logistics sites

FASHION STAKEHOLDERS

1.1 billion in turnover 9 million customers in 2017

7,000 employees

1,100 points of sale

11 online stores25 million unique visitors in 2017

25 million pairs of shoes

70 million items of clothing

15 million accessories

ASIA

FRANCE2 shoe manufacturing factories

3 Group sourcing officesWing Fat & Eram Team World

2 Group sourcing officesWing Fat & Eram India

1 Group sourcing officesEram Team World

MAP OF OUR BRANDS AND THE MANUFACTURING COUNTRIES

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SHOES AND CLOTHES

Tbs 33%Parade 35%Gémo 9%Mellow Yellow 91%

Tbs 67%Parade 65%Gémo 91%Mellow Yellow 9%

9% EUROPE & MAGHREBEurope 5% - Maghreb 4%Breakdown By Brand

91% ASIAChina 46% - Other Asian countries 45%Breakdown By Brand

Heyraud 96%Bocage 64%Texto 40%Eram 41%

Mellow Yellow 43%Tbs 42%Parade 40%Gémo 15%

Heyraud 4%Bocage 36%Texto 60%Eram 59%

Mellow Yellow 57%Tbs 58%Parade 60%Gémo 85%

22% EUROPE & MAGHREBFrance 4% - Europe 16% - Maghreb 2%Breakdown By Brand

76% ASIAChina 57% - Other Asian countries 19%Breakdown By Brand

SIGNIFICANT ACTIONS AS FASHION STAKEHOLDERS

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The initial condition of this factory meant we drew an end to our collaboration with the supplier concerned. But in light of the its director’s ambition to significantly improve the facilities and given his specific expertise, we decided to help him and build a new production site together.

Two and a half years were needed to build a new factory that meets the strictest social and environmental regulations and standards. Month after month, our local compliance team helped on the project with building construction and passing on technical skills to the workers. During this period, Gémo kept up its orders.

An example of a successful partnership that we are rolling out as often as possible, whenever it is a joint ambition with mutual benefits.

1 - DUTY OF CARE FOR OUR SUPPLIERS1.1 - Significant risks associated with our business model

The Rana Plaza tragedy in 2013 highlighted the terrible conditions in which the clothes were manufactured and the lack of international regulations to govern corporate responsibility. The law on duty of care published in April 2017 is a direct result of this tragedy. Supply chain risk management has become an essential concern. Requirements in terms of responsibility and transparency covered in these legal measures have been taken into account since 2014.

1.2 A dedicated team supporting factories as partners

Our compliance team supports our supplier factories to help them improve the working and safety conditions of their employees. Every factory must be pre-audited to identify any possible non-compliance. Then, depending on the nature of the corrective actions required, the factory has around 6 months to implement the desired improvements. The particularity of our approach is the technical advice and support we give our suppliers, proof of a joint commitment. When a factory is compliant, a third-party organisation audits it to confirm the changes made.

“GÉMO34%

of suppliers are safety-approved representing

45% of volumes”

IN 2015 IN 2017

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1.3 - A unique initiative: Gémo and Bangladeshi FSCD partnership (Fire Security Civil Defence )

An example of a successful collaboration, protecting workers in textile factories.After the Rana Plaza tragedy, multinationals set up audit and control procedures for their factories in Bangladesh. These measures were welcomed initially, but they have progressively led to criticism from those concerned who see it as a new form of colonialism.

In this context, Gémo’s compliance team proposed to use a Bangladeshi institution, the Fire Service Civil Defence (FSCD), to check fire safety and give fire-fighters a sense of pride in protecting their fellow countrymen.

After a year and a half of working together, an agreement was signed by Gémo management and General Ali (Central Director for Public Safety in Bangladesh), formalising Gémo’s audit training of an FSCD team, followed by factory audits performed by this team of newly trained auditors.Judging by their welcome in factories, this was a successful exchange of skills. And the fire-fighters are proud to rediscover their place: protecting people.

AN INITIATIVE THAT PROFITS THE ENTIRE TEXTILE INDUSTRY.The new expertise of the FSCD will benefit all textile factories. Gémo has become the first private and foreign company to have successfully developed a local solution which will increase safety for thousands of workers who make the clothes we wear everyday.

1.4 - An energy-saving programme in the supplier factories

Gémo is ISO 50001 certified for its energy-saving programme in its stores. It offered to share its expertise with compliance teams in India. Our energy engineer trained this team so that it can help factories reduce their energy use.

The FSCD fire-fighters and the compliance

team.

Certificationof the compliance teams

in Bangladesh.

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2.2 - Traceability of fabrics

Tracing the journey our products make from raw material to finished product is a pressing necessity for two major reasons.

- Because our clients ask us; increasing numbers want to know precisely where the items they buy come from.

- To reduce our environmental impact through better management of our supply sources and through an improved product journey.

2017 marked the start of this project with the launch of the approach with all the Group’s purchasing teams and through the acquisition of a tool to trace the manufacturing stages right back to the source.

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“A pair of jeans travels 65,000km from field

to store.”

How does this tool function?

The principle is based on a system of cascading questionnaires to identify

successive levels: each supplier provides its direct suppliers and so on

until we get back to the raw materials. Different control and audit systems are

set up to check the reliability of the data.

What are the materials concerned?

Two raw materials are the object of this project:leather and cotton. Most of our products

are made of these two materials, both of which impact heavily on the environment.

Tracing our products is the first step towards sustainable transformation

of our purchasing processes.

TESTIMONIAL

2 - TRACEABILITY2.1 - Environmental challenges for consumer health

According to a study by the Danish Fashion Institute, the fashion sector is the second most polluting industry in the world, just behind the oil industry: water pollution from dyes, heavy use of pesticides for growing cotton, high use of water in tanneries, CO2 emissions.

Concerns about the impact of chemical substances on health are a basic trend that our sector cannot escape. To resolve these issues, it is our responsibility to better manage risks through a policy of chemical testing, as early as possible in the manufacturing chain.

EVOLVING TOWARDS A MORE ECOLOGICAL MODEL FROM CONCEPTION TO END-OF-LIFE IS THEREFORE AN IMPERATIVE WE MUST TACKLE.

Christophe NadalQuality and Environment Director

in charge of traceability tool implementation

(source: Ademe)

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3 - GENERAL PURCHASING IS ALSO INVOLVED IN A RESPONSIBLE APPROACH3 years ago, general purchasing integrated CSR criteria into its bidding process.In 2017, 80% of bids contained CSR criteria, compared to 56% in 2016. Nearly 40% of bids chosen are already “CSR friendly” meaning they have a positive impact on the company and the environment, a figure that has doubled in a year.

What do the suppliers think of us?To complete the approach, this year we asked our main suppliers to tell us what they think of how we work together. The questions concerned clarity of the information during consultations, fairness in the choice of supplier, knowledge of our responsible purchasing policy, of our improvement directions...

Of the 85 questionnaires sent, 44 came back positive and told us what they thought. This approach reflects the state of mind we would like to generate in our stakeholder relations.

“77% of suppliers

were selected after a bidding process which included

CSR criteria”

Kevin with Blandine and Alain.Recruitment that moves opinions and

considerations forward.

In 2017, the Group subcontracted €203,000 to disabled and adapted businesses, 29% more than in 2016.

This is the fruit of a significant investment by the general purchasing and brands teams. After training in 2016, this year the entire team spent an immersive day at a company from the disability sector to better understand how the sector works and integrate it further in purchasing policies.

FOCUS ON DISABILITY IN BUSINESSSince September, Gémo reception has been outsourced to businesses employing the disabled.For Kevin who joined our team, his workstation has been refitted.

SIGNIFICANT ACTIONS AS RETAILERS

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THE BRANDS ARE SUPPORTED BY:

AUDENCIA CSR ChairCabinet Imagin’ableThomas Busutill: An expert in positive innovation

4 - WORKING TOWARDS NEW BUSINESS MODELSTo meet our social and environmental challenges, this year we launched a project to trial a new development model based on the service system*, the main objective of which is to separate growth from consumption of resources.

With the support of the ADEME and ECO-TLC, 3 brands (Bocage, TBS, Parade) and our La Manufacture factory embarked on this project. At the end of 2017, we had devised different solutions to develop the service system. 2018 will be the year for designing these offers to experiment in a real environment in 2019.

*Service system = sale of the use of a product rather than sale of the product itself.

5 - CSR HAS AN INCREASINGLY WIDE SCOPE5.1 - CSR network ambassadors

We have a group of around a dozen sales network employees (sales advisers, store managers, regional directors) who roll out the CSR policy more widely to all the store teams. This group sets its own priorities:

First priority: be able to better understand customer questions when they ask us about where the products come from, what chemicals are used, etc. To achieve this, the group has written a document that has been given to each store.

Second priority: waste. Store employees deplore the huge quantities of boxes, paper and plastic that generate a lot of waste to process and create a wasteful image that is increasingly frowned upon. Thanks to their proposals, working groups have been set up by the brands to reduce packaging whilst preserving the quality of our products.

5.2 - CSR rolled out operationally in the brands.

Alongside the CSR Committee which meets once a quarter, several brands from the Group have created groups or steering committees to closely manage CSR actions.

B U S I N E S S S C H O O L

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Gémo Open Forum 2017

Another of the most efficient apps for our customers: quality feedback that is analysed and resolved in record time.

For several years now, Gémo has been exploring its employees’ initiatives. Convinced that the best ideas emerge from an interdisciplinary and collaborative approach, as does the energy to implement them, Gémo involves all its teams in many business-wide think-tanks.

IN JULY 2017, 250 EMPLOYEES FROM EVERY DEPARTMENT MET TO DISCUSS CUSTOMER CULTURE.

A conclusive and participative day that resulted in 10 projects about customers with the promise of implementing all of them in 2018.

An approach that is above all collaborative; regardless of the department, business or sector, only motivation counts when it comes to moving these projects forward.

6 - COLLABORATIVE MANAGEMENT AT THE CUSTOMER’S SERVICETbs launched the “montbs” app in May 2017 so that every employee can be a brand Ambassador and Stakeholder. This app is the result of a collective project to simplify, organise and facilitate discussions between central services, logistics and store employees.

Energy Management via ISO 50 001 certification received in June 2015.

Removal of half our lights.

Less energy-consuming concepts and store renovations.

Lamps refitted with LEDs.

Store energy challenges.

7 - SAVING ENERGY ON OUR SITES30% less energy in 4 years

To achieve this objective, different measures have been implemented:

For all of our logistics, industrial and office sites, we have created a network of energy representatives with support from the Maine-et-Loire CCI. These representatives have been trained to steer energy reduction on their respective sites.

8 - WASTE REDUCTIONNo more shoe boxes for Bocage

A pilot test was launched last year with Bocage shoes made in our La Manufacture factory in Montjean-sur-Loire (30% of the brand’s volumes). To drastically reduce waste, we provided “shuttle boxes” in foldable rigid cardboard. Shoes are delivered to the stores in these boxes then it is up to the customer to decide whether they want the box or not. In nearly 90% of cases, customers want to leave the box at the store and take a bag in organic cotton to carry their shoes. The boxes then come back to the factory flat, ready for a new “shuttle” service. The immediate success of this approach shows the market’s readiness to take part in sustainability initiatives.

Recycling circuit for ink cartridgesIn 2017, we finalised a partnership with the Nantes-based company ARMOR, specialised in the collection and recycling of ink cartridges. This operation concerns all of our stores and represents 20,000 cartridges a year. Between April and December, 62% of stores were kitted out. The aim is for all our points of sale to use this system.

Gémo: pursuing its product packaging reduction programmeFor the second year, Gémo has optimisedthe packaging inside its shoe boxes.

11% lessfor the

whole group

34% less for Gémo

compared to 2013

12% less for the town

centre network

“78% of shoe boxes

are made from recycled cardboard”

SUMMARY OF 2017 RESULTS

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SOCIAL CHALLENGES

2020 GOALS RESULTS AT END OF 2017 PROGRESS

Employee dialogue

Employability and skills development

Gender equality

Employee health and safety

Employees / customers with disabilities

Budgetary restrictions have delayed drawing up Scheduled Accessibility Programmes (Ad’AP). The compliance programme scheduled for 2018 should make up for this delay.

This multi-factor progression is the result of better identifying people with disabilities and providing personalised support.

• Heading towards the bestcomparable businessperformances

• Developing participatory andhorizontal initiatives

• Increase certificate trainingcourses

• Every employee should attendat least one training courseevery 3 years

• Target zerowork accidents

• Enable all our customerswith disabilities to access ouroffers and stores

• Increase cooperation with thedisability sector

• Increase our number ofemployees with disabilities

• Ensure female applicantsare always consideredwhen hiring managers

• Great Place to Work Survey58% satisfaction in 2016 +12 points over 2014.The best within our sector: 65%The average among French employees: 44%

• Strong development of these initiatives: innovation trade fair with close to 200 participants, launch of internal social media google+, my tbs, my welper, open forums, digital community, conferences, etc.

• 216 employees have beenon certificate training courses

• 39% of staff have had trainingin 2017 and 60% over thelast 3 years

• 63% of managersrecruited in 2017were women

• Compliant points of sale:Texto: 63%TBS: 52%HEYRAUD: 29%ERAM: 28%BOCAGE: 27%GÉMO: 18%

• 185 k€; + 17% vs 2016Amount has doubled vs 2014

• Employment percentagein businesses concerned:6.65% (vs 5.01 in 2016)Overall employment percentage(businesses concerned + networks):2.33% vs 1.92% in 2016

• Head office: Severity rate = 0.18 andFrequency = 3.48

• Warehouses-Factories: Severity rate = 1.49 andFrequency = 30.37

• Stores: Severity rate = 2.69 and Frequency = 28.36

• General absenteeism: 9.37

COMMUNITY CHALLENGES

ENVIRONMENTAL CHALLENGES

PROGRESS COMPARED TO THE

QUANTITATIVE OBJECTIVE

PROGRESS COMPARED TO THE

QUANTITATIVE OBJECTIVE

2020 GOALS

2020 GOALS

RESULTS AT END OF 2017

RESULTS AT END OF 2017

A duty of careamong our suppliers

Textile product safety

Project

Responsible non-market purchases

• 100% of suppliers audited

• All brands are committedto a test process

• Chemical tests coverall the materials used

• Integrate the group’s100 primary suppliersin a CSR progress plan

• All new supplierschosen according to CSR criteria

• For Gémo: 34% of suppliersare safety-approved, representing 45%of volumes

• TBS and Parade: 100% safety-approved

• This year, Eram joined the Footwear

Product Safety Programme

• 94% of products purchased are ina testing programme

• Group total: 48% of productstested at the end of 2017, withdifferences depending on the brand

• Gémo: 98%

• Parade: 57%

• ERAM: 51%

• Mellow Yellow: 33%

• Texto: 29%

• Dresco: 15%

• Bocage: 12%

• Heyraud: 5%

• 35% of services provided are “CSRfriendly”, meaning they move us forward inour everyday activities (vs 20% in 2016)

• 77% of suppliers “were selectedafter a bidding process which includedCSR criteria”

Sensitive raw materials (resources & biodiversity)

Product waste and packaging

Reduce energy use

• Every informationpossible about the originsof raw materials

• Continually reduce thevolume of paper usedand product packaging

• Choose eco-produced anddesigned paper and packaging

• 20% lessthan 2015

• Leather traceability: since 2015,all of our level 1 suppliers send us thecontact details of their leather supplier.

• Cotton traceability: projectlaunched in Bangladesh

The launch of a traceability tool has enabled us to trace back to the raw material and achieve our objective.

• 11% less for the whole group, of which:

34% less for Gémo compared to 2013

12% less for the town centre network

0 for the factories and warehouses

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