SOCIAL ASPECTS

Our highlights in 2021 included:

• Zero fatal accidents at PUMA and its direct suppliers for the fourth year in a row
• Capturing 13,557 workers’ feedback from 8 countries concerning their satisfaction with management via a mobile APP survey, worker hotline promotion activities covered 34,009 workers – PUMA hotline received 223 cases, 121% increase compared to 101 cases in 2020, 99.6% are resolved, 3rd party platforms 3,132 cases, 207% increase compared to 1021 cases in 2020
• Accelerated pace towards shared industry compliance-assessment tools; increase in the percentage of converted external compliance reports from 54% to 59%
• 508 audit reports from 477 factories despite travel restrictions and partial lockdowns
• Closer engagement with suppliers through open dialog including annual COVID survey and frequent webinars
• Benchmarked 46 Core T1 suppliers’ wage level through the Fair Labor Association’s Fair Compensation Dashboard, aligned on approaches to close wage gaps

HUMAN RIGHTS

Relates to United Nations Sustainable Development Goals 3, 5, 8 and 10

Target Description:

• Train 100,000 direct and indirect staff on women’s empowerment
• Map subcontractors and T2 suppliers
• 25,000 hours of community engagement globally per year

KPIs:

• Percentage of worker complaints resolved
• Number of factories with an A, B+, B-, C or D grade
• Number of T2 suppliers and subcontractors included in our risk mapping
• Number of zero-tolerance issues prevailing at year end
• Number of employee hours spent on community engagement (KPI shared with HR)
• Number of workers trained on women’s empowerment

PUMA’s sustainability policies are aligned with the United Nations’ Declaration of Human Rights, the UN Guiding Principles for Business and Human Rights, the International Labour Organization’s Core Labour Conventions, and the ten principles of the United Nations Global Compact. Observing Human Rights was part of our first Code of Conduct developed in 1993 and has guided our business ethics ever since. It has been the long-standing practice of PUMA to continuously and rigorously monitor our supply chain and conduct Human Rights due diligence on all our suppliers globally, including those in major production hubs such as Vietnam, Bangladesh and China.

2021 was still heavily impacted by the COVID-19 pandemic, although the impacts varied from country to country. We continued our focus on the following to safeguard our supplier business and workers’ employment and income.

1. Order and Production Management

• Minimizing order cancellations; 0.40% of orders were canceled in 2021.
• The cancelled orders were not yet in production, we compensated for raw material costs.
• Agreeing on order delays with our customers during the difficult lockdown period.
• Through our dialog with suppliers, we have been able to accommodate order placement to facilitate more flexibility along the supply chain, thus we did not extend our production lead time to the same extent as 2020.

2. Financing and Payments

• While the absolute financed volume of our FOREVER BETTER Vendor Financing Program increased by 9.4% compared to last year to €534 million in 2021, the financed ratio (= financed volume vs. invoice volume) fell from 28% to 24% due to the increased annual invoice volume.
• Payment terms for our suppliers remained stable.
• Paying for all orders in full and on time.
• No late-delivery penalties.

3. Guidance and Monitoring

Throughout the whole lock-down period, PUMA kept in close communication with the suppliers, and provided them comprehensive guidance including legal decisions, local government and Better Work guidance, and good practices from some suppliers.

From our survey, 36% of factories in Vietnam answered that their workers’ payment was impacted, followed by Turkey with 7%. We followed up with these suppliers and verified that workers have received their payment as per local legislation. In Vietnam our team provided comprehensive guidance to suppliers on re-opening and monitoring the COVID situation throughout the whole lockdown period.

Globally, workers’ layoff rate decreased from 1% to 0.05% (2020 vs. 2021), all workers were paid severance payment.

Cancellations (%)	FTW	APP	ACC	Total
Full Year 2020	0.43%	0.34%	0.10%	0.35%
Full Year 2021	0.84%	0.09%	0.01%	0.40%

RESPONSIBLE PURCHASING PRACTICE POLICY

As a responsible business partner to our suppliers, we recognize that our own business practices, as well as our trading terms and conditions can have a significant impact on the organization at our suppliers’ factories. The aim of this PUMA Responsible Sourcing Policy is to reduce potential negative impacts.

PUMA’s responsible purchasing practice was developed in 2019, to create a framework for guiding decisions and maintaining consistency through key principles:

1. Only working with suppliers who have signed a Manufacturing Agreement.
2. Payments to suppliers are made on time and in full. We only deduct payments and impose penalties when it is lawful to do so.
3. Price paid for product to include reasonable labor costs, such as overtime premium payments, social insurance payments.
4. Open Production Capacity must be declared by the supplier based on standard work weeks as per the law of the relevant production country.
5. Seasonal production plans are allocated considering the negotiated capacity with the supplier.
6. Sufficient production lead time must be provided.
7. Suppliers may not subcontract production without authorization from PUMA. All subcontracting units should respect our Code of Conduct.

In 2021, 143 PUMA colleagues from development, sourcing, production joined Responsible Sourcing Practice training, the same topic also covered 1,145 supplier participants through virtual webinars. The training referred to the UN Guiding Principles on Business and Human Rights, to explain the link between the purchasing practices, potential impact on working conditions and risk of Human Rights violations.

In 2022 we will ask strategic T1 suppliers to participate in the Better Buying survey (collecting core suppliers' feedback on the implementation status of PUMA responsible purchasing practices), further training and discussions on the results with sourcing team members will also take place.

FOREVER BETTER VENDOR FINANCING PROGRAM

We use our PUMA Forever Better Vendor Financing Program to incentivize suppliers, with a better scoring in our social and environmental compliance audits with lower interest rates.

The program, founded in 2016, allows suppliers with a good or very compliance rating to benefit from PUMA’s high credit rating and preferred interest rates.

The program runs in partnership with IFC, BNP Paribas, HSBC and Standard Chartered Bank.

At the end of 2021, 62 vendors are registered users (57 at end of 2020) and the financed volumes in the full year 2021 was €534 m (+ € 46 m compared to 2020).

HUMAN RIGHTS RISK ASSESSMENT

In previous years we had conducted Human Rights risk assessments at the corporate and the supply chain level and communicated the results in our 2016 and 2017 Annual Reports. In 2021 we commissioned and completed a Human Rights risk assessment focusing on forced labor management in the supply chain. The most salient risks to Human Rights are forced or bonded labor in our supply chain and, at the farm level, child labor.

SUPPLY CHAIN FORCED LABOUR MANAGEMENT APPROACH REVIEW

In 2021 supply chain services company ELEVATE supported PUMA by conducting an evaluation of its Human Rights risk assessment approach, with specific focus on forced labor. The evaluation framework utilized has drawn on the expectations of the UN Guiding Principles for Business and Human Rights (UNGPs) with specific focus on risks of forced labor, based on the definition of forced labor specified in the ILO Forced Labour Convention, 1930 (No. 29) as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered themself voluntarily”. ELEVATE has also utilized ILO’s 11 indicators of forced labor in this analysis.

Policy Commitment and Embedding

As a result of the assessment, PUMA scores highly regarding policy commitment and internal alignment. ELEVATE recommended strengthening existing human rights-related policies to explicitly reference the ILO Forced Labor Convention, and all eleven forced labor indicators. We are in the process of developing a Human Rights policy which will include this as a specific element. We are also developing Human Rights eLearning to provide further guidance materials for internal teams on mitigating risks. In 2022 we plan to publish the policy and train our suppliers accordingly.

Forced Labor Due Diligence Procedures and Processes

As a response to the ELEVATE recommendation, we refreshed our risk assessment for supply chain and published it in this report. This includes both risk exposure and business leverage insights to prioritize suppliers.

PUMA reviewed the severity grading of audit findings linked to the forced labor indication, which will then also increase escalation and prioritized investigation, and remediation processes. We revised our social handbook and trained our suppliers and sourcing colleagues respectively.

At the end of 2021 PUMA also adopted the ELEVATE intelligence or “EiQ”: a comprehensive suite of supply chain analytics, to:

• Assess our supply chain risks by geography, commodity and issue.
• Complete a risk assessment for suppliers, factories and sites.
• Manage risks that are material for each supplier, factory or site.

In our revised handbooks, we request our vendors to conduct due diligence. We will facilitate our supplier training in due diligence through the International Training Center (ITC) platform of the International Labor Organization (ILO).

To increase transparency, we now report on the most common audit findings, training, grievances and mitigation measures as outcome focused KPIs (Key Performance Indicators) to track the effectiveness of our supplier programs.

While the PUMA hotline is accessible to Civil Society Organizations (CSOs) and external stakeholders, we will review our stakeholder engagement methodology, especially CSO stakeholders representing vulnerable groups: women, children & migrant workers.

Stakeholder outreach, we will translate our updated handbooks and create videos for suppliers in different languages.

We will conduct regular reviews of the grievance mechanisms available to stakeholders, in line with the UN Guiding Principles (UNGP) effectiveness criteria. We also review how stakeholder groups that are likely to use the grievance mechanism are engaged in the performance of the mechanism.

RUBBER MAPPING

An example of our supply chain due diligence efforts at farm level is the rubber mapping project in collaboration with the Fair Labor Association. In 2019, the Fair Labor Association partnered with the International Organization for Migration and three global footwear and three major sporting goods companies including PUMA, which source shoes and sporting goods from Vietnam, on a project to map natural rubber. The project report was published in 2021: Natural Rubber Supply Chain Mapping in Vietnam | Fair Labor Association

The project had two primary objectives:

1. Map the natural rubber value chain in Vietnam to understand supply chain structure, worker demographics, the process of recruiting workers, and working conditions across the tiers of the natural rubber supply chain.
2. Inform participating companies about supply chain mapping through an action-based learning approach to help companies identify gaps in the internal supply chain management systems and understand internal and external practices that can streamline mapping in the future.

At the plantation and rubber farm level, the research team found a general lack of awareness of legal requirements and a lack of government labor inspections. The project highlighted the challenges to addressing labor issues in the rubber supply chain. Most industry stakeholders have not considered upstream supply chain mapping as a core operational activity. The scope of the supply chains, which often span borders, makes mapping a resource-intensive exercise that is a challenge for any single company to undertake, while collective approaches to mapping have not yet been developed.

This research was a first step towards mapping Human Rights and labor risks in the supply chain of natural rubber. This exploratory exercise has highlighted issues with working conditions at rubber production level. The project developed an understanding of purchasing practices at different tiers, how the factories engaged with upstream suppliers and evaluated the worker demographic at the facility level. Moving forward, PUMA will continuously explore the opportunity to engage with stakeholders on lower tier monitoring.

WORKERS SURVEY 2020 & 2021

In 2020 PUMA launched the Worker Survey Program with 17,551 workers from 20 suppliers, in China and Vietnam, through the APP-based technology Microbenefit. In 2021 the program was extended to 48 suppliers and 13,557 workers from all our major sourcing countries. Overall workers’ satisfaction increased by 6% compared to 2020 (average score in 2020: 3.93; average score in 2021: 4.17; workers score each survey question from 0-the least satisfied- to 5-the most satisfied).

In China we see increased workers satisfaction on Fair Compensation, Health and Safety and Working Hours, only the rating of Stress Management declined slightly (-0.02) compared with 2020.

However, in Vietnam due to the adverse impact of the COVID lockdowns, and the increased number of factories in this survey, the overall satisfaction dropped: Fair Compensation (-0.54) dropped the most. The reduction of working hours caused by the lockdown is very likely to be the main reason for this. Grievance Mechanism (-0.38) dropped compared with 2020. We will engage with the factories to provide training to raise workers’ awareness and confidence on factories’ grievance channels.

We had one-on-one communication with all participating factories to understand their challenges and agreed on key priorities to improve in the coming year.

WOMEN’S EMPOWERMENT

On international women’s day, Guy Rider, the Director General of the International Labour Organization said: “Humanity can only be at its best when gender equality becomes a reality for all, everywhere. We must and will make it happen.”

Training women on their rights and empowering them to advance their careers further is key to achieving gender equality, where both men and women have equal power and opportunities for education, healthcare, economic participation and personal development.

PUMA initiatives support suppliers in reviewing existing policies and practices or establishing new ones to realize women’s empowerment.

Already today, 59% of workers producing PUMA goods are women and 54% of factory managerial positions at our Core Tier 1 suppliers are filled with women.

We believe that collaboration among the industry and with NGO experts in women’s empowerment is key to avoid duplication and provide the right expertise.

PUMA cooperated with International Center for Research on Women (ICRW) to run a Gender Equity Project in Indonesia, Vietnam, India and Bangladesh. In 2021 a total of 9 PUMA factories used the Gender Equity Self – Diagnostic Tool to understand the condition of gender equity. By using this tool, suppliers can determine where there are opportunities to enhance gender integration through their policies and practices and then improve gender equity within their factories. They can identify actions they can take to open and strengthen women’s pathways to leadership and operations. In 2022 we will follow up with actions taken by these 9 factories. As of now, PUMA together with ICRW and other brands are still working on the development of the tools and a scale up plan.

In 2021 we conducted a pilot: The video from Better Work Course related to Sexual Harassment Prevention was uploaded to the MicroBenefit Platform from late 2021 in Vietnam. 175 employees in 6 factories finished the training online.

The International Training Centre (ITC) has been at the forefront of learning and training since 1964. As part of the International Labour Organization, it is dedicated to achieving decent work while exploring the frontiers of the future of work. To strengthen PUMA’s commitment to promote responsible business conduct (RBC), fundamental principles and rights at work, and occupational safety and health (OSH) throughout our operations and network of business partners, ITC-ILO created customized online training packages for our sustainability team. After completing courses (10 RBC modules plus 18 OSH modules, topics are listed below) and successfully passing the technical exams with the ITC-ILO and learning about effective training methodologies both for online and face-to-face delivery, PUMA Social Sustainability team members were certified by ITC-ILO as Trainers on RBC and OSH in 2021. The PUMA team is training and certifying the factory management team to deliver training to workers on RBC and OSH. One of the topics is Harassment and Violence at the workplace. We conducted a pilot to train 10 factory managerial staff, who extended the training to 570 workers, counting for more than 386 hours of training, at 4 factories in China, Bangladesh, Vietnam and Indonesia.

PUMA extended women’s empowerment outreach beyond factory female workers and in 2021, we signed a long-term agreement with Women Win, an organization which empowers girls and women around the world through sports.

Through the partnership with Women Win, we aim to increase the visibility of female athletes and sports role models and support initiatives that tear down obstacles to girls’ and women’s access to sports.

Through projects supported directly by PUMA, Women Win will reach 5,000 girls and women. Furthermore, as a core funding partner, we will contribute towards Women Win reaching another 1 million girls and women by the end of 2023.

For women and girls, sport is a powerful tool to challenge gender norms and stereotypes, to regain ownership of their bodies, to experience joy, freedom and pleasure. Giving girls and women access to sports can create opportunities for them to team up, speak out and get active – in sports and in their communities – which in turn can create more equal societies.

Compared with 2019 and 2020, the number of A rated factories decreased in 2021 mainly because systematic excessive working hours have been addressed as a critical issue and the extensive nature of the SLCP verified data set has helped to identify additional findings for remediation. Nevertheless, the percentage of passed audits remained above 90%.

G.07 AUDIT RESULTS 2019-2021

G.08 NUMBER OF MOST FREQUENT FINDINGS (EXCLUDING CONVERTED REPORTS) 2020-2021

Some factories have non-conformity on social security benefit and legal obligations, such as missing required sub-licenses. 95% of workers are covered under social security among all our Core T1 suppliers.

Systemic overtime has remained a challenge for both years and we plan to conduct working hours management training to all T1 suppliers in 2022 and conduct a root cause analysis workshop with selected Core T1 suppliers to explore opportunities for improvement and engage with sourcing team to follow up on improvement.

There were 8 records identified in 2021 about risk of Freedom of Association breach, mainly related to the election process of union or worker representation committees. 6 of these have been rectified and 2 remain open. We will continue our engagement with the factory management to close these cases.

There was 1 violation identified in 2021 with the Better Work report regarding factory management’s behavior. The issue was remediated.

PUMA is committed to respecting women’s rights as per the Convention on the Elimination of Discrimination Against Women and expect suppliers to commit to and respect women’s rights. In this context we carefully monitor working conditions for pregnant women. 16 audit findings related to pregnant workers, mainly about insufficient breaks, 2 of them are closed and 14 are still under follow-up at the date of reporting. Pregnant women were not found restrained to bathroom breaks from 2021 assessment.

There was no violation found on forced overtime and restricted freedom of movement or retaining workers' passports or other identity/personal documents. 21 violations were identified on delayed payment, 6 of them are closed and we are still following up the 13 pending findings, for the remaining 2 open findings, the factories were inactivated.

17% of corrective actions pertaining to wages and/or overtime were implemented, and these issues were resolved within 2021. We noticed improvements in occupational health and safety, risk management and transparency. Reducing overtime and increasing social security coverage remains a focus of our efforts.

Beyond auditing, we track social key performance indicators such as average payments vs. minimum wage payments, overtime hours or coverage by collective bargaining agreements. This data is discussed under the Fair Income target.

SUPPLIER TRAINING

Beyond auditing we increased our engagement through capacity building activities:

Meeting	Topics	Number of factories	Number of participants
Supplier Virtual Meetings	Sustainability updates, best practices sharing, etc.	Approx. 466 per round (3 rounds)	Approx. 1,083 per round (3 rounds)
Code of Ethics		459	1,029
Responsible Sourcing Policy		492	143 internal sourcing 1,145 factory participants
OHS Risk Assessment	Guiding Core T2 suppliers on what and how to do OHS Risk Assessment	94	249

GRIEVANCE CHANNELS

We operate multiple worker voice channels. If workers are not satisfied with the responses offered by factories via their respective internal grievance system, we encourage the use of the PUMA Hotline to raise complaints or request consultations. Phone numbers and email addresses for this hotline are published on our Code of Conduct posters displayed at every factory globally. We also use WeChat, Zalo, Facebook and other social media to connect with workers and have established more formalized compliance and human resources apps at selected core suppliers.

The third-party platforms are accessible at 71 strategic suppliers, representing more than 60% of our sourcing volume, to 147,341 workers. In 2021 we received 3,132 workers’ feedbacks through the MicroBenefits and the WOVO platforms in China, Indonesia, Pakistan, Philippines and Vietnam, and the Amader Kotha Helpline in Bangladesh, which is a 207% increase compared to 2020. Among these thousands of feedbacks, 39 cases were escalated to PUMA as the factory did not respond within the agreed timeline. PUMA engaged with factory management to address the workers' concerns. All the other concerns not escalated to PUMA were handled and resolved directly by the factory management.

To promote the PUMA Hotline, in 2021 we developed a video translated into nine languages to cover our major sourcing countries. We used MicroBenefits and WOVO platforms to reach 34,009 workers. After a worker watches the video related to the PUMA Hotline and then they complete a quiz to test their knowledge; this worker is then eligible for a lucky draw to win a prize offered by PUMA. According to the quiz, 99% of workers know the PUMA Hotline, and 84% workers in China could remember our 11-hotline phone number.

223 workers’ concerns were raised through PUMA’s Hotline across eight countries, 121% more than 2020. Our team resolved 99% of them.

We also received six third-party complaints from external organizations related to PUMA’s manufacturing partners. They focused on freedom of association and fair compensation. Two complaints about freedom of association were resolved in 2021, the union representatives were either reinstated or compensated in agreement with the unions involved. Four are still under follow-up.

G.09 NUMBER OF MOST FREQUENT GRIEVANCES RAISED IN 2021

Through PUMA own Hotline, “Employment Relationship" and “Fair Compensation" are the most frequent concerns raised by workers in 2021. We maintain our focus on resolving the pending issue raised in 2021.

CAMBODIA

In early 2021 we received three complaints from one of the local unions in Cambodia. The allegation was about factories’ potential breach of Freedom of Association. While we worked to find the best solution related to these concerns, PUMA partnered with Better Factory Cambodia to provide a customized workshop to factory management, shop stewards and union representatives. 109 participants from 20 factories attended the training.

The training covered

• Rights and obligations of employer, unions and worker representatives and workplace relations.
• Employment contract termination: Resignation, dismissal, retrenchment as per the Cambodian labour law, and policies & procedures.
• Compensation in case of employment contract termination.

The end line survey shows that factories have increased their awareness by 21% / 16% / 11% respectively on resignation/retrenchment/termination process and scenario.

All issues identified during our auditing and hotline activities are classified as zero-tolerance issues (such as child labor or forced labor), critical issues or other issues.

As the name implies, zero-tolerance issues lead to the immediate failure of an audit. If these issues are reported for a new factory, the factory will not be allowed to produce PUMA goods. Established suppliers must remedy all zero-tolerance issues immediately by conducting a root-cause analysis and implementing preventive measures to avoid the issue from recurring in the future. As a last resort, business relationships will be terminated if the factory fails to cooperate. Other issues are also followed up by our Compliance team.

During 2021 we identified and were able to remedy four zero-tolerance issues (workers’ compensation below legal requirement).

Country	2021	2020	2019
Bangladesh	2	4	0
Cambodia	2	0	0
China		0	1
Indonesia		0	1
Vietnam		0	1
Total	4	4	3

“PUMA has demonstrated a strong and consistent commitment to worker’s rights through their longtime partnership with Fair Labor Association. An FLA accredited company since 2007, PUMA is an established social compliance leader, developing sustainable approaches and implementing robust systems designed to protect workers in their global supply chain.”

SHARON WAXMAN
President & CEO, Fair Labor Association

Fair Income

Target description:

• Carry out fair wage assessments including mapping of a specific wage ladder for top five sourcing countries to help improve their wage levels and practices
• Ensure bank transfer payment to workers by all core suppliers by 2022
• Ensure effective and freely elected worker representation at all Core T1 suppliers through collaboration with other brands

Relates to United Nations Sustainable Development Goals 1, 2 and 10

KPIs:

• Percentage of average wages compared to minimum wage
• Percentage of workers with permanent contracts
• Percentage of workers with social insurance coverage
• Percentage of workers paid via bank transfer
• Percentage of factories with freely elected worker representation
• Percentage of factories with collective bargaining agreements
• Number of countries with fair wage assessments over the last five years

For the definition of fair wages, PUMA follows the requirements for compensation set out in the Code of Conduct published by the Fair Labor Association (FLA):

https://www.fairlabor.org/our-work/labor-standards

The Fair Wage Network conducts wage assessments and evaluates the wage systems of selected factories across 12 dimensions, focusing on five major areas: legal compliance, wage levels, wage adjustments, pay systems and social dialog and communication.

https://fair-wage.com/12-dimensions/

As part of our efforts to ensure fair wage practices at the factories of our suppliers, we have defined the full payment of at least the minimum wage as a zero-tolerance issue. This means that to be taken on as or to remain active PUMA suppliers, companies must pay minimum wages in full compliance with local regulations. Provisions around payment of overtime hours and social insurance are also clearly articulated in the PUMA Code of Conduct and are scrutinized regularly based on our Compliance Audit Program.

FAIR WAGE ASSESSMENT

For other dimensions of fair wages, we asked the Fair Wage Network (FWN) to conduct formal fair wage assessments at our core suppliers based in Bangladesh (2018), Cambodia (2019) and Indonesia (2021).

During 2021 we purchased a license to the living wage database of the Fair Wage Network.

PUMA together with Fair Wage Network conducted a fair wage assessment in 3 factories in Indonesia, one Footwear supplier scored 299/400, which means the factory received a Fair Wage Certificate. Among the 12 dimensions of Fair Wage, the factory achieved a ‘FAIR’ score in 8 dimensions: wage and overtime payment, communication, and social dialog, for example.

In 2021 we asked the FWN to reconduct fair wage assessments among the same key suppliers in Bangladesh and Cambodia. It was positive that a number of factories had continued to strengthen some institutional elements such as wage grids and schemes relating pay to performance.

At the same time, similar developments were not always reported on social dialog, with workers’ representatives not always involved in wage discussions, and with collective agreements being rarely signed at factory level, something that gives valuable information for follow-up and remediation in these specific factories but also for our 10FOR25 goals to ensure our Core T1 factories should have freely elected workers representatives.

Overall, workers’ satisfaction with wages and working conditions was found to be relatively good, with almost all workers being either ‘fully’ or ‘partly’ satisfied with their wages and working conditions.

The performance of 4 factories (3 Apparel factories, 2 in Bangladesh, 1 in Cambodia, 1 Footwear factory in Indonesia), including on the living wage front, were particularly outstanding so they were granted the Fair Wage certification. The other remaining factories in the 3 countries are asked to engage in a remediation process for improving their performance in the wage areas that were found to be less strong.

FAIR COMPENSATION DASHBOARD

At PUMA we have been collecting wage data annually from our Core T1 factories for several years. We use these data to report S-KPIs (table T.07). In 2021 we took the next step and uploaded the 2020 wage data of 46 strategic T1 suppliers into the Fair Labor Association (FLA) Fair Compensation Dashboard* for comparison with our industry peers and, where available, against living wage estimates of the Global Living Wage Coalition (GLWC)***. For this purpose, the Anker Methodology** was used to calculate workers wages and the gap to a living wage.

Graph G.10 below indicates the results of our benchmarking for 46 Core T1 factories, in local currency, covering 2020. These data cover approximately 71% of PUMA’s global production volume.

* Industry average wage data from FLA Fair Compensation Dashboard from November 2019 and October 2020. Users of the FLA’s Fair Compensation Dashboard have access to live average net wage calculations based on all wage data uploaded per country and year. Averages are adjusted as wage data is uploaded into the dashboard.

** Anker’s living wage methodology: Net Wage = Basic (Contracted) Wage + Cash Benefits + In-Kind Benefits – Mandatory Taxes and Legal Deductions. Payment of overtime is excluded.

*** https://globallivingwage.org/

G.10 FLA FAIR COMPENSATION DASHBOARD

We can see that our strategic suppliers in China, Vietnam, Bangladesh, Cambodia and Turkey pay clearly above the FLA’s industry average. For rural areas in Vietnam, the average salaries also exceed the living wage set by the Global Living Wages Coalition.

On the other hand, we also see that our suppliers in Indonesia are falling short of the average industry payments, and that the payments in Bangladesh, despite being above industry average, fall well short of the Global Living Wage Coalition Benchmark. Our suppliers in Pakistan reach 83% of the Global Living Wage Coalition Benchmark. In Indonesia, China and Turkey country-level GLWC benchmarks were not available in 2020.

In 2022 we will start fair wage assessments or remediation with low performance factories in Bangladesh, Cambodia, Pakistan, Indonesia and Vietnam (Urban).

RECRUITMENT FEES

PUMA signed the Fair Labor Association /American Apparel and Footwear Association Commitment to Responsible Recruitment in 2018.

Since then we have actively engaged with suppliers, industry peers and with the United Nation’s International Organization for Migration with the objective of ensuring that the labor rights of foreign and migrant workers are upheld in our supply chain. Through the efforts of multi-stakeholder engagements, factories paid back 42% of previously paid recruitment fees to 193 foreign migrant workers; we aim for the remaining 58% of payment to be covered in 2022.

Sub-targets		2021		Baseline 2020		Target 2025
Digital payment (% of Core T1 and T2 suppliers)		96.7%		90%		100%
% of workers that are receiving wage payments digitally		98.2%
Percentage of Core T1 supplier facilities that have trade unions or freely elected worker representation (Core T1)		35.4%		33%		100%
Fair wage assessments (mapping of a specific wage ladder for top five sourcing countries)		3 out of 5		2 out of 5		5 out of 5

Table T.07 confirms that most of our core suppliers pay basic wages that exceed minimum wage significantly, 14.5% on average. When adding overtime and bonus payment, this figure increases to 80.2%, a strong increase compared to 2020. Social insurance coverage decreased slightly due to some factories not being legally obliged to pay workers’ social security if their attendance was less than 14 days during the lockdown period. Notably, the percentage of workers being covered by a collective bargaining agreement also increased significantly from 26.9% in 2020 to 37.2% in 2021.