Ethical Fashion Initiative
ESG Due Diligence System
Ethical Fashion Initiative’s (EFI) Environment, Social and Governance (ESG) Due Diligence and Corporate Sustainability Reporting System is based on the international standards that guide responsible business conduct.
The EFI Due Diligence system is derived from:
- The United Nations Guiding Principles on Business and Human Rights (UNGPs) adopted in June 2011, and which marked an important milestone in the promotion of human rights.
- The Organization for Economic Cooperation and Development (OECD) published Principles of Corporate Governance which have since become a global benchmark for policymakers, investors, firms, and others.
- The International Labour Organisation (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration).
The system is aligned with the Human Rights Bill and with the Sustainable Development Goals (SDGs), ISO 26,000 and the UN Global Compact. Furthermore, it is consistent with the European Commission’s work on Mandatory Human Rights Due Diligence, and it works to be aligned with the forthcoming European Union Directive on Corporate Sustainability Reporting. It brings together the seven OECD key steps of Due Diligence on human rights, UNGPs and ILO guidance on responsible business conduct
- Embedding – integrated social and environmental concerns into its business paradigm as espoused in the Charter of Ethical Business, Code of Conduct and other policies and procedures published on the website and communicated to all team members, business partners and suppliers.
- On-going risk identification, assessment, and prioritisation.
- Cease, prevent or mitigate – understand the drivers of the risk or impact identified and then to define steps to address them.
- Monitoring – ongoing monitoring of the effectiveness of Due Diligence, with the emphasis on outcomes.
- Communication – issue regular reports on Due Diligence activities and makes information available on EFI’s website and social media channels.
- Remediation – follow the international standards and guidelines to provide remedies.
- Consultation with all stakeholders.
EFI tools for due diligence
The suite of tools used by EFI to ensure responsible business conduct represents the forefront of due diligence and data collection. EFI also has its own Charter of Ethical Business and its own Code of Conduct that details the values which inspire its actions.
The EFI tools apply the principles and values of the international consensus around responsible business through a series of assessments, starting with the ESG Due Diligence – Supply Chain Assessment Tool: the preliminary tool that sets in motion the entire system and aims to assess the readiness of the supply chain to engage in sustainable and responsible practices.
- Impact Assessment tools (baseline and order-based Impact Assessment surveys):
- SDG (Sustainable Development Goals) tracking tool: tracking progression towards the achievement of the SDGs, in particular goals 1, 5, 8, 10, 12,13,16 and 17 that EFI work contributes to.
- Usage of chemicals in the industry: Guidelines on Toxicology, in collaboration with Camera Nazionale della Moda Italiana, EFI is implementing guidelines on eco-toxicological requisites for chemical mixtures and industrial discharges. The guidelines are used to track and manage the production processes to ensure compliance with environmental sustainability standards.
- Environmental assessment tool for the industry being tested: this applies a set of decarbonization tools and procedures approved by Gold Standard and its affiliated partners (EFI is a member of the Value Change Initiative). In formulating targets for removal of carbon from supply chains the EFI aligns with Science Based Targets Initiative (SBTI).
- Fair labour monitoring tool – consists of a set of questions with algorithms assigning scores and performance percentage on labour standards defined by the code of conduct.
- Cost of living survey – used to develop a wage ladder to guide the implementation of living wage.
- Living wage performance tool being tested – used to measure and track businesses’ performance on living wage.
- Labour, health and safety risk mapping – maps all the tasks and associated risks in the production chain of a certain product to detect and prescribe remedial measures to problems in the production process.
- RFID chips/Product ID – technology used to visualise a snapshot of the value chain, bringing together all components of work including material, labour, duties, logistics and the cost of production.
- Governance checklist being tested – used to disclose, account, address, and report as well as hold businesses to higher governance standards.
The EFI tool for corporate sustainability reporting
The tool (currently being tested) produces a periodical report published by business partners and collaborators with the goal of sharing their corporate social responsibility actions and results in the areas of due diligence. It consists of outcome questions and indicators that make streamlined accounting and reporting possible. It is being developed to be consistent with the ongoing work on European Union Directive on Corporate Sustainability reporting.
EFI's 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 Organization (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).
EFI's Code of Conduct
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