Climate Change Data

Environmental Metrics

ESG Focus Areas

• Eco efficiency
• Responsible value chain
• Attractive employer
• Trusted business partner

Environmental Achievements

• Greenhouse gas emissions declined during the period, mainly due to improved fuel mix and transport efficiency measures.
• 5.9 tonnes of hazardous waste recycled in 2017.
• 538.4 tonnes of non-hazardous waste handled in 2017, mainly sent to recycling and recovery.

Social Achievements

• Employee turnover was 24 percent in 2016 and 22 percent in 2017 (excluding hourly, fixed-term and temporary employees).
• 57 percent of new employees were women in 2017.
• Updated Employee Code of Conduct in December 2017.

Governance Achievements

• Developed a policy framework and procedures to minimize the risk of non-compliance.
• Qliro AB is under the supervision of the Swedish Financial Supervisory Authority (FI).
• Systematic efforts are ongoing to ensure that personal data is handled responsibly in accordance with the EU’s new General Data Protection Regulation (GDPR).

Climate Goals & Targets

Environmental Challenges

• Risk that measures taken in production, warehousing and transportation are insufficient.
• Risk that hazardous products are not recycled.
• Risk of violations of human rights or working conditions in the supply chain.
• Risk of quality and safety shortfalls in product range.
• Risk of not being perceived as an attractive employer.
• Risk that gender equality and diversity initiatives are not successful.
• Risk of corruption and bribery.
• Risk of data breaches and loss of customer data, and failure to comply with the GDPR.
• Risk of violating legislation or internal regulations.
• Risk of lack of diversity on Board of Directors and in management.

Mitigation Strategies

• Qliro Group will prioritize freight forwarders who actively work to reduce environmental impact.
• Qliro Group will work to minimize resource consumption and climate impact related to manufacturing, warehousing and transportation.
• If supplier deficiencies are discovered, such as human rights violations or non-compliance with product safety, cooperation with the supplier may be terminated.
• Qliro Group works with initiatives for personnel development and succession plans for key functions.
• Qliro Group has zero tolerance against bribery and corruption.
• Qliro Group works in a structured manner with data security issues and ensures safe handling of personal data.
• The Group has developed a policy framework and procedures to minimize the risk of non-compliance.
• Qliro Group adheres to the Swedish Corporate Governance Code, including its provisions on the composition of the Board.

Supply Chain Management

Supplier Audits: Over 90 percent of significant agreements had clauses on or had been reviewed with regards to human rights in 2016 and 2017.

Responsible Procurement

• Business Partners Code of Conduct

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards, Core option

Environmental Metrics

ESG Focus Areas

• Empower Femininity
• Respect the Planet
• Fair & Equal

Environmental Achievements

• Sales of products with more sustainable materials increased by 120% on 2020
• The use of Better Cotton in own brand products increased to 56% of total sales volume.
• Hard copy invoices ended – 3 million fewer per annum
• District heating for Nelly’s premises in Borås is labelled with the Swedish Ecolabel - Good Environmental Choice
• Emissions in Scope 1 and 2 amounted to 68 tonnes of CO2e, a reduction of 30% on the previous year.

Social Achievements

• Launched Nelly Lounge customer community
• Higher social compliance - 80% of own brand suppliers underwent third-party inspection.
• No zero tolerance cases reported as per Amfori BSCI’s checks
• Transparency at product level for customers prepared

Governance Achievements

• No departures from the Swedish Code of Corporate Governance except for one instance where a board member chaired the nomination committee.

Climate Goals & Targets

Environmental Challenges

• Reduced demand for party wear and higher expenses and delays in the logistics chain due to the pandemic.
• Travel restrictions made supplier monitoring difficult.
• Increased demand for more sustainable materials may result in scarcity and increased costs.
• E-commerce returns lead to increased transport and carbon dioxide emissions and packaging use.
• Stricter chemical requirements may not always be met by all suppliers.
• Risk of production disruptions due to unforeseen factors such as pandemics or war.
• Future requirements for reduced clothing production may entail risks for the company.
• Risk of human rights breaches in the supply chain.
• Difficulty attracting and retaining talent.
• Lack of gender equality and diversity may lead to less ability to understand the market and customers.
• Data breaches, loss of customer data or public disclosure of data on individual customers.
• Risk of corruption.

Mitigation Strategies

• Developed alternative sourcing strategies (rail over air freight)
• Continuous environmental strategy to reduce emissions.
• Intensified work to develop sustainability labelling in 2022.
• Launched Nelly’s Reborn collection and secondhand sales at Nelly Lounge.
• Strategic actions to reduce unnecessary returns and packaging use.
• Suppliers make contractual undertakings to comply with EU chemicals legislation.
• Random sample tests for Nelly’s own brand products.
• Production spread across several countries and continents.
• Working towards a more circular business model.
• Supplier audits including checks for human rights breaches.
• Continuous work on well-being factors, whistleblowing, and employee consultations.
• Aims to achieve gender equality and diversity in its Board of Directors and management team.
• Structured approach to data security and secure processing of personal data in accordance with GDPR.
• Code of conduct for all employees.

Supply Chain Management

Supplier Audits: 84% of factories making Nelly’s own brand products were audited based on BSCI or Sedex in 2021.

Responsible Procurement

• Amfori BSCI code of conduct

Climate-Related Risks & Opportunities

Transition Risks

• Increased demand for more sustainable materials may result in scarcity, with increased costs as a result.
• Future requirements for reduced clothing production as a result of consumer requirements, statutory requirements or materials shortages may entail risks for the company in its current form.

Reporting Standards

Frameworks Used: SASB

UN Sustainable Development Goals

• 3
• 5
• 8
• 12
• 13
• 17

Nelly’s day-to-day operations mainly concerns six of the UN Sustainable Development Goals: Goal 3: Good Health and Well-being, Goal 5: Gender Equality, Goal 8: Decent Work and Economic Growth, Goal 12: Responsible Consumption and Production, Goal 13: Climate Action, Goal 17: Partnerships for the Goals.

Sustainable Products & Innovation

• Nelly’s Reborn collection

Environmental Metrics

ESG Focus Areas

• Respect the Planet
• Fair & Equal
• Empower Femininity

Environmental Achievements

• Reduced total emissions by 16% compared to the base year 2020.
• Reduced greenhouse gas emissions in its own operations (Scopes 1 and 2) by 88% compared to the base year 2018.
• Increased the proportion of more sustainable materials from 22% to 28%.
• Increased the percentage of cotton grown according to Better Cotton principles for own brand products to 66%.
• Recycled polyester accounted for 20% of all polyester used in own brand products.
• EcoVero® replaced 22% of all viscose used in own brand products.
• Labels and washing instructions on Nelly’s own products replaced with recycled material.
• District heating for all of Nelly’s premises is labelled with the Nordic Ecolabel.
• Launched two Reborn collections in which unsold jeans were converted into new products.

Social Achievements

• 92% of the factories used to produce Nelly’s own brand products underwent third-party audits.
• No zero tolerance cases were reported as per Amfori BSCI inspections.
• 65% female workforce.
• 50% women on Board and in management team.
• In 2022, Nelly received no reports of impropriety (whistleblowing).
• Nelly signed The International Accord for health and safety in the textile and garment industry.
• Donated money and clothing to Ukraine and warm clothing to Turkey and Syria following earthquakes.

Governance Achievements

• Nelly Group follows the Swedish Code of Corporate Governance with no exceptions in 2022.
• The Board met the requirements of the Code for the majority of its members to be independent of the company and its management and for at least two members to also be independent of the company’s largest shareholders.

Climate Goals & Targets

Environmental Challenges

• Decline in total customer traffic and a decrease in conversion and gross margin.
• Risks of human rights violations in the supply chain (child labor, forced labor, harassment).
• Increased returns and transport leading to higher emissions and packaging use.
• Stricter chemicals requirements.
• Production disruptions due to unforeseen factors (pandemics, strikes).
• Risks of environmental and climate impact from energy consumption, resource usage, waste, and greenhouse gas emissions.
• Increased demand for more sustainable materials may result in scarcity and increased costs.
• Risks of corruption in the supply chain.
• Risks of data breaches and loss of customer data.
• Risk of criticism for “Femwashing” in Empower Femininity initiatives.

Mitigation Strategies

• Extensive cost-saving program and organizational restructuring.
• Focus on promoting organic traffic and increasing the efficiency of paid channels.
• Third-party solution to better utilize warehouse capacity.
• Comprehensive Code of Conduct to prevent human rights violations.
• Regular third-party inspections of suppliers’ operations.
• Strategic actions to reduce unnecessary returns and packaging use.
• Contractual undertaking from suppliers to comply with EU chemicals legislation.
• Random sample tests for own brand products.
• Production spread across several countries and continents.
• Continuous environmental strategy to reduce emissions.
• Work to increase the proportion of more sustainable materials in products.
• Enhanced sustainability communication and transparency.
• Work to create a more circular flow of materials.
• Code of conduct (ethics policy) for all employees.
• Structured approach to data security and secure processing of personal data.
• Active approach to managing personal data breaches.
• Zero tolerance for bribery and corruption.
• Whistleblower policy.

Supply Chain Management

Supplier Audits: 92% of factories audited in 2022 (own brands)

Responsible Procurement

• Amfori BSCI code of conduct for own-brand suppliers.
• Purchasing agreements and code of conduct with clauses on working conditions and human rights for external brands.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Swedish Annual Accounts Act (Chapters 6 and 7)

UN Sustainable Development Goals

• 3
• 5
• 8
• 12
• 13
• 17

Nelly's work aligns with these SDGs through various initiatives detailed in the report.

Sustainable Products & Innovation

• Reborn collection

Environmental Metrics

ESG Focus Areas

• Respect the Planet
• Fair & Equal
• Empower Femininity

Environmental Achievements

• Reduced total emissions by 41% compared to the 2020 base year.
• Increased the share of more sustainable materials in own-brand products to 52% (from 31% in 2022).
• New e-commerce bags made of 100% recycled materials and are 100% recyclable.
• Reduced emissions from incoming shipments of goods by 23% compared to the previous year.
• Emissions for distribution to and from customers reduced by 40% in 2023 compared with 2022.

Social Achievements

• 98% of factories used to produce Nelly’s own-brand products underwent third-party audits within the specified audit cycle.
• No zero-tolerance cases were reported as per Amfori BSCI inspections.
• 62% female workforce.
• Good gender balance in the management team.
• Donated warm clothing to earthquake-hit areas of Turkey and Syria.
• Donated SEK 100 for each limited edition top sold to the women’s rights organization Kvinna till Kvinna.
• Donated money to Human Bridge for food packages in Ukraine.
• Participated in Stadsmissionen Göteborg’s collection of graduation and prom clothing.

Governance Achievements

• No reports of impropriety (whistleblowing) received in 2023.
• Established a new returns platform to improve customer journey and reduce returns.

Climate Goals & Targets

Environmental Challenges

• Risks related to fashion trends and consumer preferences.
• Economic situation and consumer purchasing power.
• Disruption in IT and control systems, including cyberattacks.
• Supplier relationships.
• Warehousing and distribution disruptions.
• Risks of human rights violations in the supply chain.
• Risks of non-compliance with chemicals regulations.
• Risks of production disruptions due to unforeseen factors.
• Risks of Femwashing in Empower Femininity initiatives.
• Risks of corruption in international value chain.

Mitigation Strategies

• Continuous work to strengthen competitiveness.
• Significant investments in IT and control systems.
• Diversified production across several countries.
• Comprehensive Code of Conduct for suppliers.
• Regular third-party inspections of suppliers.
• Contractual undertakings from suppliers to comply with EU chemicals legislation.
• Random sample tests for own-brand products.
• Responsible, clear, and honest communication.
• Code of conduct (ethics policy) for all employees.
• Whistleblower policy.

Supply Chain Management

Supplier Audits: 98% of factories audited in 2023

Responsible Procurement

• Amfori BSCI code of conduct
• Requirements for more sustainable materials

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Chapters 6 and 7 of the Swedish Annual Accounts Act

Third-party Assurance: KPMG AB

UN Sustainable Development Goals

• Goal 3
• Goal 5
• Goal 8
• Goal 12
• Goal 13
• Goal 17

Nelly's work aligns with these SDGs through initiatives related to employee well-being, gender equality, responsible supply chain, sustainable materials, climate action, and global partnerships.

Sustainable Products & Innovation

• Products made with more sustainable materials (recycled fibers, EcoVero®, TENCEL®, organic cotton, Better Cotton)