The Next Generation of CSR: What Will It Look Like? May 22, 2014

AAFA Snapshot Representing more than 1,000 world famous name brands, the American Apparel & Footwear Association (AAFA) is the trusted public policy and political voice of the apparel and footwear industry, its management and shareholders, its four million U.S. workers, and its contribution of $350 billion in annual U.S. retail sales. AAFA stands at the forefront as a leader of positive change for the apparel and footwear industry. With integrity and purpose, AAFA delivers a unified voice on key legislative and regulatory issues. AAFA enables a collaborative forum to promote best practices and innovation. AAFA s comprehensive work ensures the continued success and growth of the apparel and footwear industry, its suppliers, and its customers. Learn more about how AAFA wears our mission at wewear.org >

Today s Presenters Randal Rankin VP Vice President, CSR Services Bureau Veritas Consumer Products Services Keri Dawson VP, Industry Solutions & Advisory Services MetricStream Nate Herman VP, International Trade AAFA

Towards Safer Factories Formation of Accord on Fire and Building Safety in Bangladesh, Alliance for Bangladesh Worker Safety, Tripartite National Plan of Action on Fire Safety Common safety inspection standard Fire, Structural and Electrical aspects Accord to cover 1500+ factories, Alliance to cover 1000+ factories, Tripartite to cover 2000+ factories Some brands and retailers still maintain their own audits Initiatives from social compliance experts GSCP, WRAP, SAI, FLA, BSCI etc. Capacity building programs 2014 MetricStream, Inc. All Rights Reserved.

Bangladesh Factory Safety Incidents Lessons in risk Increasing risk exposure across the supply chain Need to identify, assess and mitigate multiple types of risks Reputational, compliance, supply chain disruption, corruption, safety conditions etc. Lack of visibility and traceability in supply chain Audits: Quality vs. Quantity Unauthorized sub-contracting Potential falsification of data Inability to identify root causes and collaborate with workers 2014 MetricStream, Inc. All Rights Reserved.

Supply Chain Increasing Complications Multiple assurance functions and increasing # of audits, Quality Inspections, Safety Compliance Programs, C-TPAT / Security Compliance, Environmental Compliance, Sustainability Collaboration required across multiple entities Internal CSR team, sourcing, independent compliance monitors, safety audit agencies, suppliers, contractors, factories etc. Potential regulations on human trafficking, child labor Increasing regulations on quality, safety compliance, testing, trade / import compliance CA Green Chemistry, Conflict Minerals, CPSIA etc. CPSC requirements on certifications with CBP Collect and monitor chemicals, hazardous substances and minerals in products and production process 2014 MetricStream, Inc. All Rights Reserved.

Bangladesh Trends and Lessons Learned Tragic events in Bangladesh in 2013/2014 have resulted in changes largely increasing Awareness and engagement Expectations on supply chain knowledge and engagement Standards and requirements Transparency Collaboration Bureau Veritas Presentation _ April 2014 8

AAFA Instant Poll Where does your company stand on CSR?

Technology Driving Efficiency & Integration On-boarding & Assessments Environmental Compliance CSR & Social Compliance Supply Chain GRC Security Compliance Quality & Inspections Product Safety Compliance 2013 MetricStream, Inc. All Rights Reserved.

Audience Q&A

Thank You Randal Rankin VP Vice President, CSR Services Bureau Veritas Consumer Products Services randy.rankin@us.bureauveritas.com www.wewear.org www.metricstream.com Keri Dawson VP, Industry Solutions & Advisory Services MetricStream kdawson@metricstream.com Nate Herman VP, International Trade AAFA nherman@wewear.org