23 June 2021

To our stakeholders:

I am pleased to confirm that Spell Designs Pty Ltd (formerly operating as Spell and the Gypsy Collective) reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption and our alignment with the United Nations Sustainable Development Goals. Our efforts to balance our operations with mother nature is outlined in our sustainability commitments and goals, encompassing our three pillars of sustainability: People, Planet and Prosperity.

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 and in our annual impact report.

Sincerely yours,

Sarah Ackroyd
Head of Product and Sustainability

There are approximately 60 million people worldwide employed through the garment industry. With Spell's garments being produced in facilities around the world, we wouldn’t exist if it weren’t for the passion and dedication of our global partners. Over the past year, we have continued to look deeper into ethical sourcing within our supply chain and work considerably closer with our global partners to move in the right direction. We have implemented a collection of policies and procedures in order to operate in a way that identifies risks, and supports the protection of the human rights of people affected directly and indirectly by our value chain:

Sustainable Supplier Policy
Supplier Code of Conduct

We have also turned our focus internally, at our own Headquarters, developing a stronger focus on Diversity & Inclusion and establishing the framework of our Reconciliation Action Plan.
We are in the process of developing a Code of Conduct that we will train our team members on. The Code of Conduct will specify expectations of diversity, inclusion and equal opportunity. In conjunction with the Code of Conduct we will be establishing a Recruitment Policy that will outline how we intend on providing employment opportunity via alternate means of advertising, in the hope of having a further reach of the employment market.

Our Parental Leave Policy allows for greater flexibility than the National Employment Standards, which is designed to encourage and support returning Parents to the workforce.

Our sustainability strategy has us focusing on Social Advocacy and Supply Chain Transparency. Our Sustainable Supplier Policy provides us guidance as we work with our existing suppliers and bring new suppliers on board, to ensure that our partners are aligned with our social and environmental expectations. We have developed our 2025 Roadmap in order to ensure we are progressing each year with our goals. In order to contribute to global social conditions, we have established the following goals to be completed by 2025:

Supply Chain Transparency:
100% of our Tier 1 to Tier 6 suppliers to be mapped - Establishing this transparency will ensure that we know all stages of our supply chain so that we can properly evaluate and mitigate risks. In addition, as we know the suppliers further down the chain, we can start to develop relationships with them which will help us better understand their operations and promote practices that support human rights of all stakeholders in our supply chain.

Social Advocacy:
100% of our Tier 1 suppliers to sign our Supplier Code of Conduct.
Our Supplier Code of Conduct was developed on the foundations of the Ethical Trading Initiative (ETI) and the International Labour Organisation (ILO), outlining the following categories:
● Working hours
● Non-descrimination
● Child labour
● Freedom of association and the right to collective bargaining
● Wages
● Disciplinary practices
● Health and safety
● Involuntary labour
● Bribery and corruption
● Environment
● Community
● Sustainable sourcing and transparency
● Animal welfare

100% of Tier 1 and Tier 2,
60% of Tier 3,
10% of Tier 4,
40% of Tier 5, and
0% of Tier 6 shall complete an annual social audit with the absence of any major non-compliances - we understand the limitations of social audits, but we believe that they have value in getting a more detailed overview of our supplier’s operations and identify any risks or violations of local laws, regulations, or standards. They are also another way of communicating our values and expectations.

Our policies and statements are regularly reviewed in order to verify they remain relevant and effective. They are revised as necessary by our team and approved by senior management before implementation.

For each year leading up to 2025, we have established incremental and achievable goals that will help us progress in the right direction to achieve our 2025 goals. And each year we assess our progress, and report on it in our annual Impact Report.

Over the past year we have worked to better our knowledge and relationships throughout our supply chain to support and protect global human rights.

As of June 2021:

Our supply chain mapping has seen us be able to trace the following:
100% of Tier 1
71% of Tier 2
2% of Tier 3
90% of Tier 4
72% of Tier 5
60% of Tier 6

90% of our Tier 1 suppliers have undertaken an internationally recognised social audit. As we move forward in the coming years with our Supply Chain Transparency, we aim to dig deeper to extend this auditing process to the other Tiers of our supply chain.

In this past year, we finalised and published our Diversity and Inclusion Statement on our website. Moving forward we will be implementing a Diversity and Inclusion Board and hope this is established within the next 12 months. We will be partnering with Indigenous charity groups and organisations seeking their guidance and input on best practice when it comes to Diversity and Inclusion. We will be implementing training programs as part of our induction so that Diversity and Inclusion becomes part of our values and operational practices.

We intend that the D&I Board will hold us to account by us reporting to the Board on current practices and any internal changes within the business.

Spell Designs Pty Ltd (operating under Spell Group) is an Australian fashion label with our value chain extending to many areas of the globe. We are committed to truly understanding and finding the most effective way to control and reduce our negative impacts and maximise our positive impact on the global communities in which we operate, empowering our local and global workforce & our worldwide community of customers.

Our Sustainable Supplier Policy provides us guidance as we establish and maintain relationships with our global partnerships, ensuring that their operations are in alignment with our Supplier Code of Conduct. Our Supplier Code of Conduct addresses the fundamental requirements that our suppliers must meet, addressing labour rights and freedom of association.

Our suppliers sign a 3 year contract, which means we develop strong working relationships and to get to know our suppliers and their operations.

Spell supports rural artisanal design through working with Indian Fairtrade organisation Setu The Bridge to Artisans. Each year we have a goal to partner with them for a number of projects. Supporting organisations like this one helps to promote a higher standard of living in areas that may be more vulnerable to exploitation and empowers disadvantaged producers.

This past year we evaluated the risks in our supply chain and constructed our first Modern Slavery Statement in alignment with the Australian Modern Slavey Act 2018. The statement addresses the risks for modern slavery in our supply chain as well as what we are doing to mitigate these risks and what mechanisms we will implement to address grievances. Each year, we will reassess our Modern Slavery Statement to reassess risks and improve our actions to mitigate and to have in place effective grievance mechanisms. Being our first revision of our modern slavery statement, we would like to focus this coming year on developing our grievance mechanisms and rolling out to at least one of our suppliers as a pilot. It is important to us that the grievance mechanisms are effective on not just created to tick a box of completion, so we believe they will require an on-going improvement process.

In the coming year we are working to develop our internal whistleblower policy, which we will train our employees on alongside implementation.

Spell values the health and safety of all of its employees and the workers throughout our supply chain.
100% of our Tier 1 suppliers to sign our Supplier Code of Conduct - As we begin to establish relationships with our suppliers further down the chain, learning more about their operations, we aim to have each of our suppliers, from raw materials all the way to finish product, sign our Code of Conduct.
Our Supplier Code of Conduct was developed on the foundations of the Ethical Trading Initiative (ETI) and the International Labour Organisation (ILO), outlining the following categories:
● Working hours
● Non-descrimination
● Child labour
● Freedom of association and the right to collective bargaining
● Wages
● Disciplinary practices
● Health and safety
● Involuntary labour
● Bribery and corruption
● Environment
● Community
● Sustainable sourcing and transparency
● Animal welfare

We request each of our primary suppliers undergo internationally accredited 3rd party social audits which provide us with more detailed information on the production process and helps to ensure that the workers are provided a safe, legal and fair working environment. We track the audits, review the reports and work closely with the suppliers to follow up any non-compliances.
Health and Safety of our team is paramount and support by our QH&S policy. We conduct quarterly safety reporting in our Warehouse and actively reduce any risk exposed to staff. We allocate First Aid Officers + Fire Wardens to designated Areas.

We will be pursuing Annual Compliance Training across all our Policies, as well as providing refresher courses.

Prior to COVID-19, we regularly visited our suppliers in order to observe their facilities and cultivate strong personal and trusting relationships. As we cannot currently visit our suppliers due to travel restrictions, we often conduct video conferences so that we can interact with their teams and receive virtual tours of their facilities. Our Supplier Code of Conduct also helps to promote positive labour practices with our global partners. From July 2020 to June 2021 we had 100% of our Tier 1 Suppliers signed our Code of Conduct. In the next few years, we aim to dig deeper to have our Code of Conduct signed by the remaining tiers in our supply chain.

This financial year we were able to work with artisans through Setu on three projects, these projects provided approximately 314.4 days of employment to artisans in India.

As of June 2021, 90% of our Tier 1 suppliers have undertaken an internationally recognised social audit in the past year. As we move forward in the coming years with our Supply Chain Transparency, we aim to dig deeper to extend this auditing process to the other Tiers of our supply chain.

A consideration for our impact sits at the heart of all of Spells operational decisions, supported by our three pillars of sustainability: People, Planet and Prosperity. Our Planet pillar encompasses our consideration for the environment.

We implement policies, procedures and practices in our supply chain and at our own HQs that minimise our impact on the environment.

Again, our Supplier Code of Conduct addresses our expectations for minimising the impact on the environment that our garment production has on the environment.

Our Animal Welfare Policy Animals ensures that animals are not only treated with respect, but that we work to minimise the impact on their natural environment.

Each year we calculate our carbon impact in order to quantify our emissions impact to offset and allow for emission reduction strategies to be implemented. Our previous years carbon calculations have been based on Scope 1 & 2 and limited inclusion of Scope 3 from our domestic operations but moving forward we will be expanding our inventory to include more of our operations within our value chain.

As a fashion label, our fibre selection accounts for a large portion of our environmental impact. We use our preferred fibre matrix in order to guide our decisions in choosing fibres that minimise impact. Our preferred fibres are selected based on criteria that considers the overall sustainability of the raw materials, fibre processing and end of life.

We also request each of our suppliers to complete an environmental audit each year.

The current linear business model is no longer viable, and it is necessary that businesses look to incorporate circular business models. Spell is working to incorporate more circular strategies throughout our production and operations.

Being an online retailer, a large portion of our products are mailed to customers. For this reason, it is our responsibility to utilise packaging solutions that minimise impact as much as possible.

In order to minimise our, we have established the following environmental goals to be completed by 2025:

100% of our Tier 1 suppliers to sign our Supplier Code of Conduct - As we begin to establish relationships with our suppliers further down the chain, learning more about their operations, we aim to have each of our suppliers, from raw materials all the way to finish product, sign our Code of Conduct.
Our Supplier Code of Conduct was developed on the foundations of the Ethical Trading Initiative (ETI) and the International Labour Organisation (ILO), outlining the following categories:
● Working hours
● Non-descrimination
● Child labour
● Freedom of association and the right to collective bargaining
● Wages
● Disciplinary practices
● Health and safety
● Involuntary labour
● Bribery and corruption
● Environment
● Community
● Sustainable sourcing and transparency
● Animal welfare

Our preferred fibre matrix framework allows us the ability quantify and calculate the percentages of preferred fibres used each year. By the end of 2025 our goal is to have 100% of our fibres from sustainable and responsible sources.

We aim to have 100% of Tier 1 and 50% of Tier 2 suppliers undertake an annual environmental audit.

Our goal is also to have our carbon emissions from our operations including packaging fully offset.

Our circular strategies this past year included our ongoing RENEW collection which utilises our deadstock fabric. We also partnered with GlamCorner, which is a clothing rental platform.

We also finalised and distributed our Restricted Substance List and Manufactured Restricted Substance List (RSL & MRSL, respectively) and distributed to our suppliers. We also had lab testing carried out on a random sample of our garments in order to verify the absence of chemicals present in our finished textiles. The results returned with no tested chemicals present.

Over the past year we have been able to successfully implement strategies to reduce our environmental impact and have quantified our performance as follows, as of June 2021:

88% of our fibres were from preferred fibre sources, based on quantity of product produced.

43% of our Tier 1 suppliers participated in an environmental audit.

63% of our packaging solutions were from post-consumer recycled or compostable sources.

Each year we re-evaluate our fibres, packaging and goals around environmental impact in order to make sure we remain on track for reducing our impact.

Our Supplier Code of Conduct that is signed each year by our suppliers addresses our intolerance for corruption and bribery.

Over the coming year, we aim to develop and implement our internal whistleblower policy.

100% of our Tier 1 Suppliers to sign our Supplier Code of Conduct.
Our Supplier Code of Conduct was developed on the foundations of the Ethical Trading Initiative (ETI) and the International Labour Organisation (ILO) and addresses our intolerance for bribery and corruption.

No incidents identified or investigations required at this time.