March 22, 2013

To our stakeholders:

I am pleased to confirm that Elvang Denmark reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,

Tina Elvang, designer and owner of Elvang Denmark A/S

Corporate Code of Conduct

Internally
All employees are urged to raise any issues of doubts with their management for clarification and decision. We seek to be transparent and open throughout the organisation.

We will conduct our own business with the same principles we expect of others

Suppliers
We seek to develop the capacity of all of our suppliers. We chose dialogue over ultimatums with them all. Along with this we will provide time and resources to helping them boost their capacity.

We will engage our supply chain at all times so that they are aware of our commitments and feel in full understanding.

We will proactively support and boost the human rights of those touched by our activities. We will seek to go above and beyond national and international legislation to the best of our ability.

Our goal is to eliminate all kinds of discrimination in terms of work procedures and employment of people. We will encourage all those in our supply chain to engage in collective bargaining so best pursue their needs.

We will offer health treatment, pensions, holiday pay and other benefits wherever possible.

We have a zero tolerance policy on child labour. Where child labour arises, we will strive to ensure that the children are given a better alternative like school.

We support the abolishment of forced labor.

We will always seek to be at the forefront of international best practice techniques for the humane treatment of animals.

We wish to take initiatives to improve environmental challenges and urge our business partners to improve their environmental technologies.

We will not pay, nor give into demands, government employees or an employee of our business partners any portion of contract payments.

We are dedicated to enhancing the transparency of our activities in the fight against bribery and extortion.

We wish to promote employee awareness of and in compliance with company policies against bribery and extortion through training programmes and procedures.

However, in cases of blatant violations and ongoing lack of improvement, we reserve the right to cease business with our partners.

Implementation of human rights policies are done through awareness raising and training

External audits

Corporate Code of Conduct

Internally
All employees are urged to raise any issues of doubts with their management for clarification and decision. We seek to be transparent and open throughout the organisation.

We will conduct our own business with the same principles we expect of others

Suppliers
We seek to develop the capacity of all of our suppliers. We chose dialogue over ultimatums with them all. Along with this we will provide time and resources to helping them boost their capacity.

We will engage our supply chain at all times so that they are aware of our commitments and feel in full understanding.

We will proactively support and boost the human rights of those touched by our activities. We will seek to go above and beyond national and international legislation to the best of our ability.

Our goal is to eliminate all kinds of discrimination in terms of work procedures and employment of people. We will encourage all those in our supply chain to engage in collective bargaining so best pursue their needs.

We will offer health treatment, pensions, holiday pay and other benefits wherever possible.

We have a zero tolerance policy on child labour. Where child labour arises, we will strive to ensure that the children are given a better alternative like school.

We support the abolishment of forced labor.

We will always seek to be at the forefront of international best practice techniques for the humane treatment of animals.

We wish to take initiatives to improve environmental challenges and urge our business partners to improve their environmental technologies.

We will not pay, nor give into demands, government employees or an employee of our business partners any portion of contract payments.

We are dedicated to enhancing the transparency of our activities in the fight against bribery and extortion.

We wish to promote employee awareness of and in compliance with company policies against bribery and extortion through training programmes and procedures.

However, in cases of blatant violations and ongoing lack of improvement, we reserve the right to cease business with our partners.

Our factories employ over 1,200 workers including seasonal workers. Workers have access to free health facilities on site and even dental facilities. Additional to this there are provisions for purchasing food for their families at on site stores which maintain market prices. Salaries for the workers all exceed the Peruvian minimal wage provisions and include some of the benefits mentioned above. There are transparent salary scales ensuring that all workers have an understanding of their wage progress and that women and men are ensured equal salaries. Women form the backbone of the production in the factories, while men tend to perform heavier and more physical tasks. As well as these fundamental issues we have ensured that child labour is completely avoided at our supplier’s factory and that all workers have access to on-site doctors and dentists.

All of the facilities are audited and ensure that they exceed Health and Safety standards and working conditions.

Environmental damage and climate change are widely known to affect the world’s poorest communities most adversely. The Alpaca shepherds and rural community are a strong case of this as decreased rainfall, diminishing habitats and basic grazing areas are encroached and decline through global warming. The importance of the natural environment is seldom more pronounced than in a sector like Alpaca. As a result, our actions are important both directly and indirectly in this process. Firstly, we focused almost all of our production to one region ensuring shipping and transport can as streamlined as possible. As of next year we will also source our packaging from Peru, meaning every Elvang product is entirely sourced from the region. We have also cut our use of air transport to below 10%, relying almost entirely on sea freight instead

Concrete actions taken for environmental protection
Packaging to be sourced locally
Working towards 100% of shipping through sea freight in stead of air freight

Regular visits to the factory incl external audits by independent auditors

We maintain a completely open dialogue with our suppliers and ensure that the first transaction will give an excellent fair price right down to the beginning of the supply chain. This means that we maintain a commitment to dealing with them directly and never deal through intermediaries. In order to do this we encourage the producers to create an Freight on Board (FOB) price taking into account all of their margins. The starting point of all agreements is thus the suppliers themselves and accounts for their necessary living wages and relevant margins. From here we can further agree a price that suits them as well as payment details and times.

Concrete actions to prevent corruption
Increased the percentage of Alpaca wool purchased directly of sherperds without the use of middlemen.

Regular visits to the factory incl external audits by independent auditors and regular visits to the alpaca sherperds in the Andes