Esprit : Sustainability report FY2021

Letter from the Group

Dear Readers,

Welcome to the Esprit ESG Report 2021 . Esprit's approach to business and product creation has always been deeply rooted in its values of environmental sustainability and fashion circularity. This remains true even during the challenging conditions bought on by the lingering COVID-19 pandemic, on top of increasing raw material prices around the world. Esprit did not lose focus on its sustainability mission. The company made significant progress with the integration of sustainable fibers across its value chain with over 78% being supplied from sustainable sources, compared to 60% in 2020. The company is incredibly proud of this achievement. It is no easy feat.

The team at Esprit continuously monitors legislations and due diligence standards that must be fulfilled by retail companies alike. The apparel supply chain is very complex and long. The company has put a strong emphasize on policies and monitoring systems to create a transparent and sustainable supply chain. Esprit has successfully accomplished the Green Button company assessment in May 2021 and can therefore apply the Green button logo on all GOTS*-certified Esprit products. The Green Button is a government-run certification label for sustainable textiles, developed by the Federal Ministry for Economic Cooperation and Development.

The team at Esprit continues to monitor the development process of supply chain law in Germany, ensuring all obligations to legislative updates are planned and actioned for implementation. Furthermore, in each sourcing market, all product categories as well as raw materials are taken through risk assessment protocols aimed at identifying potential issues that may occur within its supply chain, with a focus on the most salient risks to workers, suppliers, producers and other key stakeholders.

The latest Fashion Revolution Transparency Index has been released in July 2021. The company is proud to announce that Esprit ranks amongst the Index's top 10 global brands. This Index is a global fashion activism movement, which campaigns for greater transparency in fashion industry supply chains and has been publishing data since 2014. It analyses and ranks 250 of the world's largest fashion brands and retailers based on their public disclosure of human rights and environmental policies, practices, and impacts, in their operations and supply chains. This is certainly a great achievement, one that reflects Esprit's effort in sustainability matters across all business areas and proves that Esprit is an ethical and sustainable brand from its inception.

What are Esprit's short term sustainability goals?

Although raw material prices will continue to increase, the company is currently planning to use more sustainable fibers and allocating time to research new innovative product options to support the circular fashion approach. The company strongly believes that the future of the fashion industry must be one of openness to new ideas and constant change to ever-changing market conditions, while ensuring high quality and innovative product offerings and exceptional value for money. This is to be achieved with a greater focus on respecting the world's resources, both in terms of the material, the environment and the people who create Esprit products. The company strives to meticulously monitor daily operations in an ethical and sustainable manner - ensuring that the brand embodies the Esprit philosophy that 'waste is no longer an option'. As a result, the company believes this calls for an added sense of inquisitiveness as it continuously challenges internal stakeholders to rethink its actions, remodel its supply chain, and integrate these values into every single step of the production lifecycle.

What are Esprit's long term sustainability goals?

Calculating carbon footprint is not an easy task, especially for a company that does not own its production units. In 2021, the company has therefore rolled out its data system to retrieve carbon footprint data from its suppliers, based on Esprit's production volume. These- so-called Scope 3 emissions are by far the majority of the brand's footprint. However, there is currently not one systematic approach to calculate these emissions. Together with Esprit's suppliers and partners, the company is currently working on solutions and are proud to show for the second time a much more comprehensive carbon footprint. However, the company will not just stop here. As data gathering is a key aspect to calculate the status quo, the next step requires the need to consider reduction targets. This will be one of Esprit's biggest challenges within the coming years, but the company is confident that it can embrace new processes.

Forward Focus

T h e p r e s e n t m a n a g e m e n t t e a m i n H o n g K o n g Headquarters and Esprit Europe believes the company is well on its way to revitalising the 50-year strong Esprit brand and cementing its commitment to make its customers feel happy and joyful. Whether it is producing timeless versatile wardrobe pieces or colorful archive- inspired collaborations, Esprit will stay true to its promise to make clothing with high-quality and innovative fabrics that are good for the environment.

With Kind Regards,

The Board of Directors of Esprit Holdings Limited

March 2022