Corporate Due Diligence

Corporate Due Diligence

 

- RISK ASSESSMENT

At Kentaur, we commit ourselves to perform corporate due diligence. Due diligence is the process by which Kentaur identifies, prevents, mitigates, and accounts for potential and actual adverse social and environmental impacts in our supply chain. Kentaur’s due diligence process is based on guidelines on corporate due diligence published by OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, Partnership for Sustainable Textiles, and the SME Compass published by Agentur für Wirtschaft & Entwicklung.

We have developed a systematic and structured system where we can analyze and assess risks in our supply chain.

Our social and environmental due diligence work covers our own and supply chain activities and is an ongoing process because risks of harm may change over time due to the evolvement of our operations and/or operating context. We always include social and environmental risks related to our products, business model, sourcing model, and countries in which we do business. To ensure we act with due diligence in our sourcing activities, we follow our Responsible Sourcing Policy. See Code of Ethics.

Our due diligence performance is risk-based, meaning that the control measures taken are based on the severity and probability of the harm assessed through a risk analysis. The risk analyses are reviewed and revised continuously, but at least in a one-year cycle. Our social and environmental risk analyses cover areas of human rights, labor rights, environment, and anti-corruption measured on 18 different parameters.

We prioritize the order in which we act from assigned risk ratings, which are based on the severity and probability of the incident occurring. In case of supply chain risks, we also use our buying volume in the prioritization of our actions. In 2022, we identified the top-prioritized risks.

SUPPLY CHAIN GRIEVANCE MECHANISM AND REMEDIATION

The objective of our due diligence process is to identify, prevent and mitigate potential harm before they turn into adverse impacts. Occasionally, the risk of harm can become an actual impact. We want to take responsibility for potential and actual social and environmental adverse impacts we might have caused or contributed to via our business and purchasing practices. We encourage our supply chain to notify Kentaur about eventual grievances through our supply chain grievance mechanism. Our grievance mechanism and remediation process are described in our Supply Chain Grievance Mechanism and Remediation process description.

See Code of Ethics

In 2022, Kentaur has not received any grievances from our supply chain partners.

 

ENERGY CRISIS – UKRAINIAN/RUSSIAN WAR

The War in Ukraine and the resulting energy crisis have affected

our business in 2022. In general, we have experienced increased

costs in our value chain as well as customer projects that have

been put on hold.

It has been difficult to implement control measures for the implications

of the Ukrainian/Russian War because it has a global impact

which we are not in control of. Nevertheless, we need to navigate

in the situation and the energy crisis has led to an increased

consciousness on energy sources and how to reduce consumption.

It is evident in our climate accounting that Kentaur has been able

to reduce the energy consumption.

FAIR REMUNERATION

This is a general risk in the textile industry and is a topic which

Kentaur is continuously focused on. We have a risk of being a

contributor to social negative impacts in our supply chain, if the

production employees’ remuneration is not equal to the wage

needed for decent living in their specific home country.

 

At our own production sites, we have a wage system containing

three wage levels which ensures that all employees’ competencies

and efficiency are rewarded, and that their remuneration is always

adjusted to the value of the work. During 2022, we have achieved

a more stable work force in Poland and Serbia which has resulted

in more skillful employees. This means that we see more employees

reaching the two highest wage levels in the wage system.

We use dialogue, third-party amfori BSCI audits, and OEKO-TEX®

STeP audits for external monitoring of fair remuneration at our

own production sites and at our suppliers. In case of deviations

the supplier is obligated to make a corrective action plan (CAP) on

how to remediate the deviation. We follow up on the CAP through

dialogue with the suppliers.

ENVIRONMENTAL IMPACT OF INPUT MATERIALS

Today, we have limited knowledge and data on the environmental

impact associated with the different input materials we purchase,

considering the whole supply chain. Currently, many of our suppliers

are not able to provide us with the data because they do not

monitor it. It poses a risk that we do not know the quantitative

environmental impact of the goods we are purchasing, because it

makes us unable to know if we make the least impactful decisions

in our product development.

 

In 2022, we made our first Life Cycle Assessment (LCA) and developed

an impact tool that can estimate the global warming potential,

water consumption and land use of our products.

Going forward we will go into closer dialogue with our supply

chains to flag the importance of accessing quantitative environmental

data from their production processes. In addition to this,

we follow the work in the EU on the Product Environmental Footprint

(PEF) because it will have a massive impact on how we need

to work with environmental data on the product level in the future.

 

RECYCLED POLYESTER MADE FROM PET BOTTLES

Since 2018, Kentaur has used recycled polyester made from PET

bottles instead of virgin polyester in new product developments

as a less environmental impactful alternative. However, the circular

transition has come to a point today where we must recycle

and circulate products and materials within their own streams. We

face a risk that we will not be able to use recycled polyester from

PET bottles in the future and we need to find a good alternative.

We do not have a good commercial substitute for all the recycled

polyester we currently use. We are participating in projects and

collaborations with recycling companies to develop fabrics with

recycled polyester made from old textiles containing polyester.

Nevertheless, the technologies are still not fully established.

In 2023, we will explore the possibilities of using other alternatives

so we can avoid going back to conventional virgin polyester

TEXTILE WASTE – PRE-CONSUMER AND POST-CONSUMER

Kentaur produces textile products which means that we have

fabric cutting waste (pre-consumer textile waste) from the manufacturing

process. In 2022, we had approx. 101 tons of fabric-cutting

waste in our own and external production. Additionally, our

products wear out over time which generates post-consumer textile

waste at the industrial laundries. These two types of textile

waste pose a potentially negative environmental impact if the

value embedded in the materials is not reused, up-, or recycled.

 

We engage in the transition of the textile industry to become circular.

We work on and participate in various upcycling and recycling

projects both nationally and internationally:

In 2022, we started segregating white cutting waste at our Serbian

production site, which is sent for mechanical textile-to-textile

recycling. In 2023, our Polish production site will follow and segregate

its fabric-cutting waste into six different fractions.

2022-2025: We participate in a national Innomission 4/Trace project

called One Textile Direction, where the overall purpose is to

establish a new state-of-the-art for circular design, procurement,

use, and reuse of textiles for the private household, public and

private professional sector.