During 2023, we made substantial progress on our social responsibility strategy, getting us closer to our wider ambition of paying all contractual suppliers a Living Wage Premium by 2025 and embedding ethical considerations into the fabric of our operations and ensuring the same standards in our entire supply chain.

There is an important distinction between minimum wage and living wage in this context, as they are two different concepts. A minimum wage is a legal requirement calculated based on the overall economic condition of the country; as part of our code of conduct, all of GANNI’s suppliers are obligated to pay the minimum wage. A living wage, on the other hand, refers to a wage level high enough to afford a basic but decent standard of living for the worker and their family. The Global Living Wage Coalition describes a living wage as the following:

“The remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and their family.” Elements of a decent standard of living include food, water, housing, education, healthcare, transport, clothing and other essential needs, including provision for unexpected events.”

Even though living wages are not mandatory by law, ensuring that workers receive living wages is crucial to creating more responsible fashion supply chains, which is why we are committed to this work. We have set a fairly ambitious target to enroll all Tier 1 suppliers to our Living Wage initiative by 2025.

You might be thinking, why is paying a living wage such a complicated process? There are no short answers here, but we will try and summarise the most important points. Because we do not own our supply chain, increasing our wages to a living wage standard involves multiple stakeholders and the sharing of otherwise classified information, which makes it immensely complex. On top of that, the suppliers we work with are not necessarily asked to set the same objectives from the other fashion brands they work with, meaning that we have to work with suppliers to create a structure for paying a premium when producing GANNI products, which is only a percentage of their total production volume.

In 2023, we included 3 suppliers into our Living Wage Initiative and identified 8 of our suppliers who are already paying above the Living Wage benchmark for their respective regions. 

By the end of 2023, 55.6% of the production facilities we work with were audited by third parties, and non-compliance issues were actively followed up on, meaning we have taken concrete steps to ensure the well-being of workers in our supply chain, with independent audits confirming our adherence to ethical labour practices.

We carried out 10 independent third-party audits, 12% of total number of production facilities throughout the year and strengthened our policies and processes when onboarding new suppliers, with special attention paid to subcontractors. 

Towards the end of 2023, we switched our Fair Wear Foundation membership from Full Membership to Fair Wear Foundations new membership option – The Academy – which means we have decreased our financial spend with them. Our choice was guided by a series of considerations, but can be summarised into two main points:

1. Global Reach: Fair Wear Foundation is currently active in 11 countries, mainly in Asia, Northern Africa and Eastern Europe; for GANNI, this means that Fair Wear does not cover our suppliers in Portugal, Spain, and Italy, which account for 50% of our supplier base. This poses challenges in accessing expert advice and support in these regions.
2. The Fair Wear Foundation primarily focuses its efforts on Tier 1 facilities involved in cutting, making, and trimming (CMT) processes, along with certain sub-processing facilities. Consequently, its array of training programs, audits, and grievance mechanisms are specifically tailored for suppliers within this tier. This approach, however, highlights a notable limitation in addressing the broader complexities and depths of the supply chain. Beyond Tier 1, the supply chain extends into Tier 2 and Tier 3 suppliers, which play crucial roles in the overall production process but fall outside the Fair Wear Foundation's current operational scope. These additional tiers, essential components of the supply chain, are not covered by the organisation’s training, audits, grievance mechanisms, or factory management systems. This exclusion poses a significant challenge, as it does not align with our commitment to implementing human rights due diligence across the entirety of our supply chain.

While we value the tools and methodology Fair Wear has pioneered, especially in Human Rights Due Diligence (HRDD) and living wage contexts, we recognise the need to adapt to our evolving requirements. We believe that maintaining a close connection with the Fair Wear community while utilising platforms that allow us to effectively monitor our entire supply chain is the wise way forward.

As we step into 2024, we're excited to expand the Living Wage Initiative to a further 8 suppliers, and continue our commitment to fostering fair and responsible relationships with our suppliers. We will persistently refine our sourcing strategy, collaborating with suppliers to proactively address and improve working conditions.

With supply chain traceability at the heart of achieving elements of our social and environmental strategy, we are moving away from conventional reliance on geographical data and have started integrating product impact-related metrics throughout our supply chain. Partnering with Fairly Made®, an impact assessment platform based in Paris, France, we successfully executed a pilot project analysing the environmental footprint of some of our products made in India and China based on primary supply chain data. In 2024, we are diligently working to broaden the scope of our pilot initiative. Our aim is to conduct comprehensive analyses of all primary materials utilised across our collections and present accessible and consumer-friendly product impact breakdowns on GANNI.com.

Contractual suppliers are suppliers that GANNI has a direct contractual relationship with. These suppliers sign a mutual business agreement with GANNI that sets the standard for the relationship between the parties and outlines general requirements and codes of conduct.

It is a common practice for suppliers to outsource production to subcontractors due to production capacity or specific skill requirements. Subcontractors are not owned by the subcontracting facility. Subsidiaries on the other hand are separate and legally independent entities that are owned or controlled by the contractual supplier.

Tier 2 suppliers produce the materials used to manufacture the finished product. This tier involves processes, such as weaving, printing, and dyeing. While GANNI has a contractual relationship with its Tier 1 suppliers, it is not common to have a contractual relationship with Tier 2 suppliers and beyond. To gain a comprehensive understanding of Tier 2 suppliers GANNI collaborates with its contractual suppliers to request supplier information.

In Tier 3 raw material is transformed into yarn by undergoing spinning, dyeing and other preparatory processes. It is common to have very limited contact and visibility over Tier 3 suppliers. Through good collaboration in the supply chain, GANNI has achieved a comprehensive overview of the reported Tier 3 suppliers. 

Tier 4 in the supply chain corresponds to the raw material source, such as cotton and animal farms as well as man-made fibre producers. Farmers usually work with agents consolidating the raw material input. This makes it difficult to track and report on this stage of the supply chain. GANNI is continuously working to improve visibility on this tier by collaborating with its supply chain partners.