RESPONSIBLE, SUSTAINABLE AND ETHICAL TRADE
ESG Due Diligence and Reporting Framework
What is EFI's ESG Due Diligence and Reporting Framework?
The Ethical Fashion Initiative and the Camera Nazionale della Moda Italiana are co-creating a due diligence system that allows producers and brands/retailers to work together to manage ESG risks and produce sound and accurate Corporate Sustainability Reporting.
“Environmental and social factors are increasingly material to long-term enterprise value creation. Investors and stakeholders now expect companies to report on non-financial issues, risks and opportunities with the same discipline and rigour as financial information. Corporations and companies that align their goals to the long term goals of society as articulated in the SDGs are the most likely to create long term sustainable value, while driving positive outcomes for business, the economy and society and the planet.
This is the true definition of stakeholder capitalism.”
Reference: World Economic Forum – Towards Common metrics and Consistent Reporting of Sustainable Value Creation
INTERNATIONAL CONSENSUS ON ESG DUE DILIGENCE
With a broad international consensus, Ethical Fashion Initiative and the National Chamber of Italian Fashion are co-creating and ESG Due Diligence and company Sustainability Reporting system founded on three sets of internationally recognised standards on responsible business conduct:
1. FIVE LEAVING VOLUNTARY FRAMEWORKS AND STANDARD SETTING BODIES
- Carbon Disclosure Project (CDP)
- Climate Disclosure Standards Board (CDSB)
- Global Reporting Initiative (GRI)
- International Integrated Reporting Council (IIRC)
- Sustainability Accounting Standard Board (SASB)
In addition, the International Business Council and the World Economic Forum have brought all the above together, with an SDG perspective, creating a set of common metrics aimed at reporting consistently on sustainable value creation.
2. WORK OF THE EUROPEAN UNION
EU Directive on Corporate Sustainability Reporting
3. UN ALLIANCE FOR SUSTAINABLE FASHION
UN Alliance which brings together the UN consensus and opens to interaction with the EU and all voluntary frameworks and standard setting bodies.
- UN’s guiding principles on business and human rights
- Sustainable Development Goals
- Paris agreement Framework
- International Labour Organisation standards
- The work of UN Environment Programme
THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) DUE DILIGENCE AND CORPORATE REPORTING SYSTEM
The suggested Due Diligence Framework for ESG and Corporate Sustainability reporting is about a better way of making fashion and lifestyle products. It has two instruments for due diligence and reporting:
1. SUPPLY CHAIN DUE DILIGENCE
Is used for risk profiling and management of suppliers by indicating the levels of risks in the sourcing practices with each supplier and how such risks map onto the three ESG elements.
6 Levels of risk measure
2. COMPANY DUE DILIGENCE AND CORPORATE SUSTAINABILITY REPORTING TOOL
Used to report on company’s overall standing on ESG consistent with sustainable value creation
20 areas of due diligence
283 quantitative indicators
Areas of Due Diligence
- Environmental management system
- Utilization of natural capital
- Use of green / renewable energies
- Facility environmental efficiency
- Scope 3 (Supply Chain)
- Scope 2 (Indirect)
- Scope 1 (Fugitive)
- Product impact
- Material usage
- Pollution and waste management
- Usage of chemicals
- Sourcing practices
- Selling practice
- Dignity, equality, safety, health and well-being at work
- Community capital development
- Human capital development
- Respect for Human Rights in the supply chain
- Governing Purpose and quality of governing body
- Ethical behaviour
- Stakeholder engagement
- Supply Chain transparency and circularity
- Financial audit
EFI's ESG Due Diligence and Reporting Framework - Charter of Ethical Business
The Charter sets out the principles and values that underpin our approach to ethical and sustainable business and is based on established international human rights instruments, such as the Universal Declaration of Human Rights and International Labour Organisation (ILO) Conventions. It does not attempt to create new standards or legally binding instruments. Instead it focuses on how those standards can be applied in the value chain.
The Charter comprises both Social/Labour and Environmental commitments:
The foundation of our commitment to ethical trade is the Universal Declaration of Human Rights (UDHR), starting with Article 1: ‘All human beings are born free and equal in dignity and rights.’ (SDG 1, 10, 16)
Our purpose is to enable, through work, the freedom, equality, dignity and rights of all those who contribute to the production of fashion and lifestyle products (SDG 5, 8, 10)
We believe that Ethical Fashion and Lifestyle products flow from a process of creation and self-realisation that is ethics-based, from the choice of materials and tools, to the skills and savoir-faire used in the creative process, to respect for all stakeholders in the value chain, including producers, workers and their communities and consumers (SDGs 8, 11, 12)
As value chain actors, we commit to building chains based on values that we declare with full transparency, traceability and accountability for our social and environmental impacts (SDGs 6, 7, 13, 14, 15)
We strive to deploy regenerative business practices where production, consumption and redistribution promote social and environmental sustainability (SDG 12)
We promote a vision of shared responsibility between all stakeholders for the human rights and environmental performance of the value chain (SDG 17)
We acknowledge the value provided by nature, people and society and the need for social, human and natural capital accounting (SDG 12)
We endeavour to provide work that is meaningful, purposeful and confers dignity (SDG 8)
We commit to paying taxes, negotiating fair contracts and paying fair wages that reduce poverty, inequality and exclusion (SDG 1, 10)
We believe that work must enable people to lead better lives in the communities where production processes take place. We enable this by creating conditions for greater equality of opportunity and treatment, fairness and equity in the employer-employee relationship, access to education and training, livelihoods and respect (SDGs 4, 5, 10, and 16).
If you are an existing partner, please follow this link using your password to access the toolbox and get started on EFI’s ESG Due Diligence and Reporting Framework.
Do you want to apply EFI's ESG Due Diligence and Reporting Framework in your company?
Please fill out the form and a member of the EFI team will be in touch.