Corporate Social Responsibility Report - Komar

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2019Corporate Social Responsibility Report

Table of Contents1.A LETTER FROM OUR CEO2.ABOUT US3.S TA R G A R M E N T S5.4.9.15.RESPONSIBILITYS U S TA I N A B I L I T YCOMMUNITYSOCIAL COMPLIANCE6. S U P P LY C H A I N T R A N S PA R E N C Y7. S U P P L I E R A U D I T A N A LY S I S8. Q U A L I T Y A S S U R A N C E10. S U S TA I N A B I L I T Y I N I T I AT I V E S11. D I S T R I B U T I O N C E N T E R S12. S TA R G A R M E N T S13. WA S T E R E D U C T I O N14. S U S TA I N A B L E S O U R C I N G19.O U R R OA D M A P A H E A D16.17.E M P LOY E E E N G AG E M E N T SK O M A R C A R E S I N I T I AT I V E S18.SPOTLIGHT -S TA N D I N G U P W I T H M I R A C L E F E E T

A LETTER FROM OUR CEOIn 1908, Charles Komar started a women’s intimate apparel business in downtownNew York with one guiding principle “You have only one reputation”. More than acentury later, as his grandson, I endeavor to abide by the same principle to shape ourbusiness and serve our customers.When I joined the company almost 40 years back,Komar had over 1000 employees in five factories, andtoday we are a family of more than 8000 employees withmanufacturing in over eleven countries. I attribute oursuccess to the commitment of our employees to adaptand invent in the dynamic apparel market, and theirwillingness to embrace change. We all work hard toensure that our products are safe, ethically sourced andcater to every price point.As our business has grown, our corporate socialresponsibility has also evolved over the years. In therecent years, we developed and implemented our owncode of conduct, and established an audit team, whoconducts regular inspections and audits to verify safetyof our workers and quality of our goods. We have moretransparency than ever before in our supply chain andstrong relationships with our suppliers.In the pages that follow, we have further highlightedour ongoing efforts and partnerships, and share ourperspective for the future. Our commitment is to bemore than just an apparel company. I see the future ofKomar as one of growth, innovation, transparency, andcollaboration with our peers, customers, consumers,employees, suppliers, and factories. Thank you forbeing a part of this journey.Yours sincerely,Charlie KomarCEO & PresidentKomar Brands2019 was a crucial year for us to further our pledgein moving towards a sustainable future. We adopted a5-year roadmap with a vision to embed sustainabilitypractices in our supply chain and community. Inaddition, the Sustainable Future Group (SFG) hascertified our manufacturing base in Sri Lanka as CarbonNeutral . I am proud to say that Star Garments isthe first company in the apparel industry, with all 14factories and offices certified internationally.12019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

ABOUT USEstablished in 1908, Komar is a privately held global organization representingmore than 100 brands and licenses. With our headquarters in New Jerseyand operations on four continents, we are an industry leader in a variety ofcompetitive retail categories.Our dynamic distribution and manufacturing baseallow us to maintain an efficient and transparentsupply chain. With state-of-the-art developmentcenter and in-house design team, we aim tocollaborate with our customers and cater to theirneeds and develop on-trend quality garments.By the end of 2019, we had produced more than150 million garments, employed close to 8000people worldwide, and catered to over 50 customersacross Americas, Europe and UK.OUR DIVISIONSKIDS2LAYERI NG2019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

With over 40 years of history, Star Garments is oneof the key players in Sri Lanka apparel industry. Ouroperations comprised of an Innovation Center and tenmanufacturing plants, situated in a strategic locationnear major regional shipping routes to Europe, HongKong and the United States offering shorter lead timeand cost-effective shipping.We are premier full-service provider of fashion apparelacross a broad range of product categories includingwomen’s and men’s woven garments, cut and sewknits and intimate apparel. Apart from comprehensivedesign services, we also provide product developmentresources and in-house value-added services suchas garment washing and embroidery. Our team isalso equipped with 3-D design and developmentequipment and training supported by Browzwear.32019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

Responsibility42019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

SOCIAL COMPLIANCEKomar prides for its long-standing history of exceptional moralstandards in the inner workings of the company to conduct itsbusiness in accordance with high ethical and business standards,and seek its suppliers, factories, and licensees to conductthemselves in the same manner. The following code of conduct isthe basis for our inspections and evaluations of our factories toensure that all products comply with our ethical standards. No child labor No forced or prison labor No abuse or discrimination Working hour and compensation limitations Health and safety Communication of principles Freedom of association Compliance with applicable laws Measuring environmental impact Monitoring Responsible Recruitment52019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

S U P P LY C H A I N T R A N S PA R E N C YSince our inception, maintaining strong relationships with our suppliersis a part of our core values. Not only do we partner with our factories, wealso maintain relationships with their partners and suppliers. In 2019, weoversaw 150 factories in 11 countries around the world.We are always committed to assisting our suppliers in monitoring everyoperation in the supply chain, investigating violations, and makingcontinuous improvements to ensure the safety of workers and factorymanagement at all levels.Supplier Relationships638FACTORIES13FACTORIES4FACTORIES255 YEARS10 YEARS15 YEARSLONGESTRELATIONSHIP2019YEARSC O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

S U P P L I E R A U D I T A N A LY S I S6009635300TOTAL INTERNALAUDITSTOTAL FACTORYBASE AUDITEDIMPROVEMENTSSEENTOTAL EXTERNALAUDITSMORE THAN%We consider continuous growth of our suppliersas a crucial part of our supply chain management.For the same, we have a dedicated compliance teamof 1 Corporate Social Responsibility Director, 3Compliance managers and 6 compliance auditorsto oversee our factory base.%MORE THANApart from regular audits, our team also conductsunannounced audits to ensure our suppliers abide byour code of conduct. Remediation is also an integralpart of our program and we assist our suppliersthrough training, verifications and follow-ups toensure they can stand by industry standards.In order to obtain production approval, each factorymust undergo rigorous training and review by ourteam. Within last few years, we have been evaluatingour factories on quality management system, socialcompliance and security issues. In 2019, we broadenedour program to include environmental issues.72019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

QUALITY ASSURANCETo maintain the quality of each garment, Komar has adedicated Quality Assurance team working side by sidewith our factories to maintain quality of the garment.The team comprises of 2 Quality Assurance Directors,4 Quality Assurance Manager and 77 Quality ControlInspectors spread across the globe. They assist in theimplementation of our 5-point Quality Control program(fabric development, bulk fabric testing, garment testing,inline inspections, and final line inspections), in whichgarments are evaluated at each step of the production phaseto maintain product consistency.Our QC conducts workshops with the factories priorto production to eliminate issues during the productionprocess. We also use Smart Testing, which is an additionalthird-party garment test to ensure garments do not containharmful chemicals.CHILDREN’S SLEEPWEAR REGULATIONS:As required by Consumer Product Safety ImprovementAct (CPSIA) of 2008, all our children’s sleepwear productsundergo additional testing to show that they do not containharmful levels of lead and phthalates.CONFLICT MINERALS:Following the Section 1502 of Dodd-Frank Act, we committo not procure materials and components containing“Conflict Minerals” - tin, tantalum, tungsten, or gold (3TG)– originating from within the Democratic Republic of theCongo and adjoining countries (DRC countries). Thoughwe are not subject to SEC disclosure requirements, wecontinue to work with our supply chain partners to ensureour products are conflict free.8RESTRICTED SUBSTANCE LIST:We follow the Restricted Substance List formulated byAmerican Apparel and Footwear Association (AAFA) toensure our products are safe and devoid of any harmfulchemicals. In addition, we recommend our factories toget Oeko-tex Standard 100 certification to ensure that allcomponents are harmless and non- toxic.QUALITY ASSURANCE SYSTEM:Our factories in Sri Lanka uses Leadtec Shop Floor Controlsystem to monitor quality control in real time with RadioFrequency Identification (RFID) systems and software toscan and approve each item. This coupled with proprietarycloud-based quality assurance program and 2-D patterntechnology has assisted in maintaining the quality of theproduct.2019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

Sustainability92019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

S U S TA I N A B I L I T Y I N I T I AT I V E SWe have partnered with various industry associations andinitiatives to support our vision and goals:Carbon Disclosure Project (CDP):Since 2010, we have reported our direct and indirectimpacts on climate change to CDP.Sustainable Apparel Coalition (SAC):Komar is a manufacturer member of SAC since 2018.SAC is a leading apparel, footwear and textile alliancededicated to sustainable production. As a part of SAC,we use Higg Facility and Environment Module (FEM)and Higg Facility Social and Labor Module (FSLM) toscore and review sustainability and social impact of oursuppliers.Social & Labor Convergence Program (SLCP):We have been working with SLCP since 2018 topromote “safe and fair social labor conditions” andreduce audit fatigue for our suppliers. Komar is a retailmember of the Social Labor and Convergence Program(SLCP). The purpose of SLCP is to establish a set ofindustry-wide requirements for assessing social andlabor conditions, to reduce repetitive audits with similarresults and little added value.102019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

DISTRIBUTION CENTERSWe believe that if we conservethe resources that support us, wewill have more resources to moveforward with. We are looking at ourentire supply chain through a lensof sustainability in coherence withour holistic business practices. Withan aim to improve air, water andquality of life of our employees andcommunity, we have taken severalsteps to reduce our carbon footprintand creating additional value for ourproducts.11LED Systems: Our headquarters in New Jersey and ourdistribution centers in California and Oklahoma haveinstalled LED systems to reduce our energy output andsave costs, which we put back in similar projects.Electric equipment: At our California distributioncenter, we purchased electric trucks and forklifts to reduceenergy consumption, saving 175,052 kWh by 2019.Solar panels: Our most recent project completed in2019 is the installation of solar panels in our Oklahomadistribution center, designed to save 501,365 kWh ofelectricity annually.2019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

Star Innovation Center is the first PassiveHouse in South Asia, and one of thetwo certified factories building in theworld. The project was designed by theStephen Winter Associates, that later wonthe AIA New York 2020 Design Award- Sustainability for their designs. ThePassive House enabled an annual energysavings of 54% as compared to theprevious building structure.All factories of Star Garments Group in SriLanka, in keeping with our environmentaland sustainability commitments, havebeen certified as Carbon Neutral byNatural Capital Partners.122019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

WA S T E R E D U C T I O NEvery year, tons of fabric waste is discarded in New York City area whicheither ends up in landfills or incineration, both of which are harmful for theenvironment. Creative upscaling/recycling companies are gradually addressingthis issue and are receiving industry support to pay more attention to fabricwaste and raw material consumption.Fabscrap is a non-profit organization, which collectssuch fabric waste from businesses and repurpose it eitherthrough recycling or reusing the waste. We partneredwith Fabscrap for our office in New Jersey in 2019 andsince then we have redirected all our waste from landfillsto reuse.KOMAR IN 201944Brown Bags65Black Bags3Black Rolls132019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

S U S TA I N A B L E S O U R C I N GOur sourcing division believes that every product shouldbe created with an aim to dispose of responsibly. We arevery thoughtful of where our raw material comes from,how they are produced and what processes are involvedto create an environment-friendly garment. Sincethe last few years, we have been slowly transitioningtowards more sustainable materials with better end lifeuse. In 2020 and years to come, we plan to introducesustainable fabrics such as BCI cotton, recycled polyesterand organic cotton in all our product range.Sourcing Vision SUSTAINABLE FABRIC SUSTAINABLE PACKAGING SUSTAINABLE TRIMSA similar transition applies to our product packaging.Currently, all our hangtags and labels are made fromrecycled paper. We further plan to implement efficientpackaging methods to maximize the use of space andsustainably package our products.142019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

Community152019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

E M P LOY E E E N G AG E M E N T SAt Komar, we believe that the secret to success lies in a happy and funwork environment. We have a variety of programs in place to ensurewe support those who support us.Strong Body, Strong MindBreast Cancer AwarenessYoga classes are conducted twice in a week for ouremployees to strengthen their body. In addition, toconnect our bodies and minds, we conduct meditationclasses twice a week.Our Intimates division hosted a bra-fitting event in lieuof Breast Cancer Awareness month. The design teamheld a bra-fitting session for our employees.Bring Your Kids to Work DayWith more than 50 kids participating, this event isso far our favorite employee event. Every year, ouremployees get a chance to bring their kids to ourheadquarters in New Jersey and give them a glimpseof their work life.Education is KeyTo support our employees and their families in SriLanka, Star Garments offers 25 annual scholarships toemployees’ children to continue their secondary anduniversity education.162019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

K O M A R C A R E S I N I T I TAT I V E SOur sense of community is vast. Each year, we host a variety of eventsto bring together our employees and community to celebrate theircontributions to one another.Delivering with Delivering GoodDelivering Good partners with retailers, manufacturers,foundations, and individuals to provide the lessfortunate with daily necessities. Since the past few years,we have worked with them to provide over 100,000garments such as sleepwear, warmers and intimates forpeople in need.Volunteering with theRonald McDonald CharitiesWe believe to participate in anything that can add colorand joy to a child’s life. Adhering to this motto, ouremployees volunteer for family dinners at the RonaldMcDonald House Charities and make fun handicraftswith sick children.Inspiration with The York Street ProjectThe York Street Project in Jersey City provides shelter,food, safety and education to homeless or low-incomewomen and their children and assist them on gettingback on their feet. Working with them, we host anannual field day where children and teachers will visitour headquarters in New Jersey to learn about theapparel industry and life of a garment.For young kids and children, we also hold Christmascelebrations where children meet with Santa and receiveChristmas gifts.Getting to the Finish Line withNew City KidsKomar also supports New City Kids, a non-profitentity that assists low-income high school children intheir high school graduation and college admissionsand teaching life skills. Komar employees participatedin their fashion panel and answered questions aboutworking in the fashion industry.17Partnering with Holiday ExpressThrough Holiday Express Signature program, we givearound 18,000 warm blankets every holiday season toadults and children of New Jersey.2019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

SPOTLIGHT:S TA N D I N G U P W I T H M I R A C L E F E E TMiracle Feet is an international non-profit organization operating in 27countries that focuses on connecting children born with club feet whoneed medical assistance to local medical health care providers.Club feet are a birth defect wherein a child’s tissuesconnecting the muscles to the bones are too shortresulting in a foot or feet that face inward or aretwisted out of position. If diagnosed at an early stage,non-surgical treatment options can be implementedor if required, Ponseti method can be used to laterstage to treat them. Unfortunately, due to limitedinformation and resources, over 400 children in SriLanka who are born with this condition are not ableto get treatment on time.Since 2017, Komar has partnered with Miracle Feetin Sri Lanka to fill technical, medical and financialgaps and help young children in our Sri Lankancommunity lead happy, carefree lives.182019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

O U R R OA D M A P A H E A DGuided by our vision, we aim to work and achieve belowgoals in the next few yearsSupply Chain Mapping2020To maintain the transparency throughout our supplychain, we plan to add and monitor all our supplier onHigg Index platform.Sustainable SourcingFor our entire product range, we intend to assess theimpact of our products and implement sustainablepractices and materials in our merchandise.Safe ProductsIn the coming years, our goal is to further rigorous ourquality procedures and adhere to Oeko-tex standardsthroughout the supply chain.Eliminate Carbon EmissionsIn spite of growing resource consumption, we strive toreduce our carbon emissions every year and move towardsa carbon neutral supply chain.Waste and Water ReductionsWith conservation as the key, we want to reducewaste and water use through recycling, efficient use ofmaterials, and reuse where appropriate.Building CommunityIn keeping with our history, we will collaborate withmore organizations to give back in our community andvolunteer our services.Circular InnovationsWe plan to focus more on the lifecycle of our productsand innovate methods to reduce, recycle and reuse them.192019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

90 Hudson StreetJersey City, NJ 07302T 1 212.725.1500E social.compliance@komarbrands.com2019C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

Corporate Social Responsibility Report 2019. Table of Contents 1. 2. 3. A LETTER FROM OUR CEO ABOUT US STAR GARMENTS 19. OUR ROADMAP AHEAD. RESPONSIBILITY 5. SOCIAL COMPLIANCE . 2019 CORPORATE SOCIAL RESPONSIBILITY A LETTER FROM OUR CEO When I joined the company almost 40 years back, Komar had over 1000 employees in five factories, and

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