Fundamentals of Responsibility

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Fundamentals of Responsibility
The safe and effective operation of our business is a key aspect of running a beauty company. Our number one priority is to ensure that products are made according to the highest safety standards so that our customers can use them with confidence.
Product safety
Safeguarding consumers and professionals is of the highest importance to Coty. Without this, we would not have a business. As we build sustainability into our product development, we will continue to follow robust product safety processes to ensure our products retain the same high quality our consumers know and love.

Human safety assessments are integral to our product development process, ensuring all products are safe for their intended use. Our qualified safety experts assess all products before marketing, and all products are developed manufactured and packaged in compliance with human safety guidelines and regulations for the country in which they are sold.

Our R&D function is responsible for maintaining internal guidance on ingredient use and formulations. We draw from government sources, association recommendations, scientific literature and consultants, as well as data from our Cosmetovigilance, Consumer Affairs, and Consumer Insights and trends processes.

Once on the market, we monitor the human safety of our products through consumer feedback. In case of health-related complaints or concerns, our global Cosmetovigilance group produces expert medical case assessments, trend analysis and feedback for product development, as well as reporting to competent authorities. In FY19, we audited our Cosmetovigilance process to assess its robustness and ensure it is delivering on its purpose. Our review of 22 KPIs indicated an improvement of 15% year-on-year.

In addition, we continuously monitor High Profile Ingredients (HPI). These are ingredients that may be perceived as controversial by our consumers. We identify these ingredients in each market according to consumer concerns, regulatory decisions, or as a result of environmental or health research. Once a HPI is identified, we review whether alternative ingredients exist that do not compromise on quality.
Employee wellbeing, health & safety
We know that protecting the wellbeing of our workforce is essential to building a better, more sustainable business. We are constantly reviewing our policies and processes with the goal of ultimately achieving zero health and safety incidents
Employee health & safety
All of our employees have the right to carry out their activities in safe environments. In FY19, we launched our group-wide Health & Safety Policy which extends across our supply chain. Our employee safety principles encourage everyone to take responsibility for health and safety. In addition, we aim to build a culture of preventing incidents and where they occur, learning from them to avoid anyone coming to harm in the future.

In FY19, our Total Incident Rate (TIR) in our factories and distribution centers was 0.23, which we have successfully reduced year-on-year since 2017. We also implemented TIR reporting and tracking for our offices, studios and R&D facilities. Our overall TIR for FY19 was 0.33.
To build a culture of safety in our offices as well as our supply chain, we implemented new procedures across 13 head office locations in FY19, covering 50% of our employees. We also updated our site audit program and recommendations with clear implementation guidelines and scorecards that are reviewed by our safety leaders on a monthly basis. Across our supply chain, we implemented a consistent approach to reporting and investigations to analyze root causes of incidents. Moving forward, we will further develop our guidelines and action plans to eradicate incidents in the workplace altogether.

To support the wellbeing of our employees, we have an Employee Assistance Program (EAP) in 28 countries, providing access to counselling where necessary. We also offer subscriptions to wellbeing apps, including 3,000 subscriptions to the mindfulness app Headspace. Over 2,000 employees are now active Headspace users.

[1] Total number of Recordable Incidents multiplied by (200,000/total number working hours on a 12-month rolling average)
Responsible sourcing and Supplier engagement
Our Code of Conduct for Business Partners sets out our expectations for suppliers. By the end of June 2019, 289 of these suppliers had signed up to the Code.

To better understand the risks in our supply chain, we mapped all in-scope direct spend suppliers according to their risk of non-compliance to or Code of Conduct for Business Partners. This mapping is based on the material or ingredient being purchased, the geographical region of the supplier and the level of spend with that them. We have engaged those deemed higher risk using the Suppliers’ Ethical Data Exchange (SEDEX), an online tool that allows the scoring and verification of suppliers’ self-assessment and third-party audits. In FY19, 82 sites were successfully verified.

We continue to use the EcoVadis 360o ESG assessments for suppliers within indirect spend categories. Both Coty and the supplier receive a report based on data and references from governments, NGOs, trade associations and stakeholders. If areas of high risk are identified, a timebound corrective action plan is put in place.
Sustainability governance
We recognize that sustainability needs to be integrated across our business in order to achieve our targets. We have built in regular communication opportunities with key stakeholders and leaders to make sure we achieve our sustainability ambitions.

Our Chief Operating Officer oversees the Sustainability team, which works closely with functions, divisions and brands within the company, as well as our external partners. The Sustainability Steering Committee, which includes members of our Executive Committee (EC), receives quarterly updates on progress and takes the operational decisions required to support the delivery of initiatives. Progress is reported to the EC twice a year and chaired by the CEO. The EC is responsible for setting the strategy and ensuring resources are allocated to achieve our goals. The Board will review this progress on an annual basis at the very least.

 Limited assurance provided by KPMG