Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change & Sustainability
• People
• Planet
• Product

Environmental Achievements

• Reduced absolute Scope 1 and 2 GHG emissions 55% by 2030 from a Fiscal 2017 baseline
• Reduced absolute Scope 3 GHG emissions from purchased goods and services and upstream transportation 30% by 2030 from a Fiscal 2017 baseline
• Utilize 100% renewable energy across our owned-and-operated facilities by Fiscal 2026
• Source 50% of our polyester from recycled materials by Fiscal 2026
• Key packaging materials shall be reduced and originate from more sustainable sources by Fiscal 2031

Social Achievements

• Initiatives to promote overall alignment with our performance, purpose, guiding principles, and strategy are therefore important and include internal communications and education about our programs, townhalls across various parts of our business, and a listening strategy that engages associates in providing input and feedback on a variety of topics
• Global Inclusion, Diversity and Equity Council sets global goals and strategic direction in alignment with VF’s global IDEA strategy
• Council to Advance Racial Equity (“CARE”) oversees our commitments on actions that promote: increasing Black, Indigenous and People of Color (“BIPOC”) representation at the director and above population in the U.S.; diverse candidate slates; pay equity; leader compensation tied to successful implementation of our IDEA strategy; mentorship and sponsorship of BIPOC employees and members of the community; and elevating our commitment to education, listening and learning
• Programs sponsored by our ERGs. Our ERGs enhance our culture of belonging by creating a safe space for learning and dialogue for underrepresented groups, establishing a sense of community among associates and providing platforms to collect and share insights to support business imperatives
• Associate Wellbeing and Safety initiatives including comprehensive and competitive benefits program

Governance Achievements

• Board of Directors and its Committees provide governance and oversight on a broad range of VF’s human capital management efforts
• Board’s oversight includes review of CEO and executive officer performance, compensation and succession planning and inclusion, and diversity and belonging programs and initiatives
• Talent and Compensation Committee works with management on executive compensation and compensation risks, and regularly reviews our progress on company-wide HCM priorities, including inclusion, diversity and equity, benefits, wellbeing, succession planning and talent development strategies
• VF’s Audit Committee monitors current and emerging risks, including HCM risks, and VF’s health and safety program
• Governance and Corporate Responsibility Committee is responsible for conducting Board succession planning and the selection of nominees to the Board, and reviews VF’s Code of Business Conduct and VF’s sustainability policies, goals and programs

Climate Goals & Targets

Environmental Challenges

• Global economic conditions are also impacted by the coronavirus (“COVID-19”) pandemic, which resulted in retail store closures primarily in the Asia-Pacific region, and supply chain disruption
• Macroeconomic conditions include inflationary pressures, foreign exchange rate fluctuations, higher interest rates and weakening consumer sentiment. These conditions have led to elevated inventories in certain markets and an increased promotional environment, impacts on the results of our international businesses and increased borrowing costs
• In response to the ongoing conflict in Ukraine, all VF-operated retail locations within Russia are permanently closed, while limited wholesale shipments to both Russia and Ukraine have resumed

Mitigation Strategies

• VF worked with its suppliers to minimize disruption and employed expedited freight as needed
• The Company is also operating in a higher interest rate environment, resulting in increased borrowing costs
• VF has considered the impact of these developments on the estimates and assumptions used when preparing the consolidated financial statements and accompanying notes

Supply Chain Management

Responsible Procurement

• Global Compliance Principles

Climate-Related Risks & Opportunities

Physical Risks

• extreme weather events

Transition Risks

• regulatory changes

Reporting Standards

Frameworks Used: SASB, GRI

Environmental Metrics

ESG Focus Areas

• Climate Change & Sustainability
• People
• Planet
• Product

Environmental Achievements

• Reduce absolute Scope 1 and 2 GHG emissions 55% by 2030 from a Fiscal 2017 baseline
• Reduce absolute Scope 3 GHG emissions from purchased goods and services and upstream transportation 30% by 2030 from a Fiscal 2017 baseline
• Utilize 100% renewable energy across our owned-and-operated facilities by Fiscal 2026
• Source 50% of our polyester from recycled materials by Fiscal 2026
• Key packaging materials will be reduced and originate from sustainable sources, and processes redesigned enabling packaging reuse or recyclability, by Fiscal 2031

Social Achievements

• Inclusion, Diversity, Equity, Action (IDEA) initiatives to enhance inclusivity by increasing Black, Indigenous and People of Color (“BIPOC”) representation; diverse candidate slates; pay equity; mentorship and sponsorship programs; and commitment to education, listening and learning
• Programs sponsored by Employee Resource Groups (ERGs) for women, BIPOC, Veterans and LGBTQ+ communities
• Comprehensive and competitive benefits program for full-time associates including health and welfare programs, retirement programs, paid parental leave, and wellbeing programming

Governance Achievements

• Established 'Climate Change & Sustainability' as a VF enterprise risk and embedded in our enterprise risk management framework
• Governance and Corporate Responsibility Committee of the Board oversees key strategies, programs, policies and risks related to sustainability and social responsibility impacts

Climate Goals & Targets

Environmental Challenges

• Weakness in the Americas region wholesale channel
• Declines across all segments, most notably in the Active and Work segments
• Cybersecurity incident in December 2023
• Continued weakness and downturn in financial results
• Slower recovery than previously anticipated
• Continued downturn in financial results and weakness in the wholesale channel
• Global economic and financial market conditions
• Intense competition in the apparel and footwear industries
• Significant shifts in the wholesale and retail channels
• Financial difficulty in the retail industry
• Recessionary conditions
• Increasing pressure on margins
• Unfavorable weather conditions
• Failure to achieve Reinvent priorities
• Supply chain disruptions
• Inadequacy, interruption, integration failure or security failure of information technology
• Data and information security and privacy risks
• Risks associated with VF’s acquisitions, divestitures and portfolio management
• Unique risks associated with the Supreme® brand's business model
• Risks associated with VF’s third-party suppliers and manufacturing facilities
• Reliance on a small number of large customers
• Risks related to VF’s direct-to-consumer business
• Inability to protect trademarks and other intellectual property rights
• Problems with VF’s distribution system
• Legal, regulatory, political and economic uncertainty and risks
• Changes to U.S. or international trade policy
• Changes in tax laws
• Compliance with national, state and local laws and regulations
• Climate change and increased focus on sustainability issues
• Significant amount of intangible assets and goodwill on the balance sheet
• Fluctuations in wage rates and the price, availability and quality of raw materials
• Foreign currency exchange rate fluctuations
• Inability to obtain financing on favorable terms
• Significant amount of indebtedness
• Risks associated with VF’s licensees
• Volatility in securities markets
• Potential substantial tax liability from the spin-off of Kontoor Brands, Inc.
• Regional epidemics or global pandemics

Mitigation Strategies

• Reinvent turnaround program to streamline and right-size cost base, identify and capture efficiencies, and strengthen the balance sheet
• Establishment of a global commercial organization with an Americas regional platform
• Cost reduction program to deliver $300 million in fixed cost savings
• Deleveraging the balance sheet
• Hedging strategies to mitigate foreign currency exchange rate fluctuations
• Cybersecurity program to protect IT systems and data
• Processes for identifying, assessing, and managing material risks from cybersecurity threats
• Cyber incident response plan
• Systems and processes to protect against unauthorized access to or use of personal information
• Cybersecurity risk insurance policy
• Supply chain initiatives to establish and maintain effective supply chain systems
• Diversifying production among countries and contractors
• Sourcing production to merchandise categories where product is readily available
• Sourcing from countries with tariff preference and free trade agreements
• Ongoing audit program to ensure compliance with VF’s Global Compliance Principles
• Business interruption insurance
• Policies and procedures to address compliance with the FCPA and similar laws
• Actions to monitor, adapt, build resilience, and develop solutions against the physical and transitional impacts from climate change
• Steps to manage the risk and volatility in the pension plans
• Managing the mix of fixed and variable interest rate debt
• Use of derivative financial instruments to manage risk
• Regular assessment and management of exposures to risks through operating and financing activities
• Purchasing insurance from commercial carriers
• Using derivative financial instruments

Supply Chain Management

Responsible Procurement

• VF’s Global Compliance Principles, consistent with international labor standards

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Flooding

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: SASB, GRI