WITH ESG
BROUGHT
TO THE FORE
0%

OF OUR BRANDS’ CLOTHES
IN 2021 WERE PART OF
ECO AWARE COLLECTIONS

0%

WOMEN WE EMPLOY
AT MANAGERIAL LEVEL
AT LPP HEADQUARTERS

LPP S.A.SUSTAINABLE DEVELOPMENTAnnual Report

SUSTAINABILITY REPORT


FOR 2021/22

Since 2017, we have published comprehensive annual reports in which we explain our objectives and commitments. In them, we also show financial results and describe the environmental and social impacts of our activities. Each report is a compendium of knowledge about LPP, our business model and the impact we have on the lives of our employees, members of local communities and the environment. It is also an excellent basis for verifying our progress in achieving the objectives we have adopted. This year’s report formula is contained in 3 documents: the Sustainability Report, the ESG Fact Sheet containing a summary of the most important figures on the LPP Group and the Climate Report prepared using the TCFD recommendations.


BUSINESS MODEL

Today nearly one th ...

Today nearly one third of transactions at LPP brands are online purchases. Over the year we have consistently improved our technological and logistical solutions to meet customer expectations. Regardless of the pace of change, we did not let up on implementing our business strategy and sustainable development. We knew that consistent and successive development in the spirit of the omnichannel model, with full development of the digitalisation of our business and with respect for the LPP’s immediate and distant surroundings, is a good and sure signpost on the road to further growth.

Marek Piechocki,
President of the management board, LPP

After a difficult 2020 and numerous lockdowns, customers were eager to visit our shops – both brick and mortar, as well as online. We have almost halved our distribution network. We launched further projects to build logistics facilities. We separated a distinct IT company from our structures – Silky Coders. We also introduced the first Reserved mobile application for our customers, and at the beginning of the year we accelerated the implementation of RFID technology in the Mohito, Cropp and House brands.


3 design offices in Poland
(Gdańsk, Cracow, Warsaw)

Over 300 designers,
5 diverse brands


1,115 suppliers
from Asia and Europe

2 representative offices in Asia
(Shanghai and Dhaka) to support
the manufacturing process

Ca. 7% of LPP collections are
produced in our close neighbourhood,
while ca. 93% are produced in Asia

We do not own any
manufacturing facilities


371 thous. m2 of combined
warehousing space

Distribution Centres in Poland
and abroad

Over 41m e-commerce orders
fulfilled in the reporting year


Our collections are available
in 39 countries on 3 continents
(at physical stores and online)

2,244 stores with the combined
space of 1,888,000 m2
across 26 countries

Online sales in 33 countries

Almost 412m items of
clothing sold annually

31,808

employees worldwide,
including 15,163 in Poland

2,244

stores in 26 countries on 3 continents
(21% year-on-year growth)

412m

pieces of clothing
sold annually

Business results

In the financial year 2021/2022, we underwent a deep technological, logistic and sales transformation. The strategy of empowering an omnichannel organization is an effective response to the challenges of doing business in post-covid times, as evidenced by our results.

  • Revenues from the e-commerce channel in the financial year 2021/22 amounted to PLN 3,961.1 million (78% increase y / y).
  • High investment commitment at the level of PLN 1,325 million, including PLN 912 million for the development of the network of brick-and-mortar stores and PLN 413 million for infrastructure development (CAPEX).
  • We drive Polish exports: its value in the reported financial year amounted to PLN 8.5 billion. Already 60.7% of the PLN 14.0 billion of our revenues comes from abroad.
  • Our net sales revenues in the financial year 2021/22 are PLN 14 billion.
  • Our contribution to the Polish budget amounted to over PLN 1.5 billion.

AWARDS AND RANKINGS IN THE REPORTING PERIOD

LPP’s good practices and initiatives for responsible business are recognised in numerous competitions and rankings. We regard the awards and distinctions we have been granted both as recognition of our efforts and motivation to continue working towards implementing the highest standards of sustainable development in our organisation and value chain. We are proud to present the results of the competitions and rankings in which LPP was awarded in the 2021/22 financial year.

AWARDS FOR LPP

CLIMATE-CONSCIOUS COMPANY

(ALI/RSF/BVP)

The Company Climate Awareness Survey is designed to assess the awareness of large and medium-sized companies regarding their impact on climate change. The analysis covers information from annual reports of companies listed on the Warsaw Stock Exchange. Only a few companies manage to meet the requirements which will apply to all enterprises after the EU Corporate Sustainability Reporting Directive (CSRD) enters into force.

CSR LEAFLETS OF POLITYKA WEEKLY

(POLITYKA WEEKLY)

The ‘Silver CSR Leaf’ – a distinction awarded based on an assessment of such areas of an organisation’s activity as: corporate governance, human rights, behaviour towards employees, environmental protection, customer care, business honesty and social involvement.

THE BEST OFFICE IN TRI-CITY

(OFFICE SUPERSTAR CBRE)

The Best Office in the Tri-City title in the Office Superstar competition for the new LPP office building in Gdańsk. The jury appreciated, among others, the combination of tradition and modernity in architecture, as well as the use of elements supporting employee welfare and user experience, spatial and material-related solutions implemented in the building.

Distinction in the “Innovation and Technology” category of the Office Superstar competition for the new LPP office building in Gdańsk. The jury appreciated the pro-environmental solutions applied in the building.

Rankings

1ST PLACE / STOCK EXCHANGE
COMPANY OF THE YEAR

(PULS BIZNESU)

The oldest and at the same time the most prestigious ranking on the Polish capital market evaluates companies based on the criteria of ‘main ranking and investor relations’.

The title of the Climate
Aware Company

(SEG/FSR/BVP)

The title of the Climate Aware Company in the 3rd edition of the survey by the Association of Stock Exchange Issuers, the Reporting Standards Foundation and Bureau Veritas Polska.

LPP received
a high “B−” rating

(CDP CLIMATE CHANGE 2020)

In the CDP Climate Change 2020 study conducted by the international organization Carbon Disclosure Project, LPP received a high “B−” rating.

ENVIRONMENTAL IMPACT

Sustainable fashion, reducing environmental impact and social responsibility – these are the key words that guide us when we plan and make decisions – from the micro to the global ones. At every step we take care to act fairly, which is appreciated by our employees, co-workers, contractors and customers. But most of all, we want our planet to feel the difference.


  • We label our collections with the Eco Aware mark, which certifies that a given model contains an appropriate percentage of more environmentally friendly materials or was produced in a factory that meets Eco Aware Production guidelines.
  • We have developed and started implementing the Eco Aware Production standard at our suppliers, which emphasises the reduction of natural resource consumption and the introduction of closed water and energy cycles in the production process.
  • We began implementing an Eco Aware Stores programme, through which we reduce our environmental impact at the point of sale.

In 2021, we joined two important initiatives working to reduce negative environmental impacts in the supply chain:

  • Canopy – we began working with an organisation that aims to develop business practices among entrepreneurs for the sustainable use of the world’s forests by implementing changes in the realm of purchasing paper, packaging and pulp fabrics;
  • Cotton Made in Africa – we partnered with a globally respected project to standardise cotton farming in Africa.

Our climate management and carbon footprint reduction initiatives were recognised with a high score in the international CDP Climate Change 2020 ranking.


ECO AWARE

product and production


26%

of all clothing offered by
LPP (increase by 7% y/y)
and 38% of clothes offered
by Reserved brand were
Eco Aware collections



30%

of factories in South Asia
covered by the Eco Aware
Production program


CHEMICAL SAFETY

in production


70%

of LPP clothing
produced in Bangladesh
and Pakistan in accordance
with ZDHC safety
standards



1st

Polish firm to have
joined Zero Discharge of
Hazardous Chemicals


PACKAGING AWARE

plastics under control


445 tons

this is how much plastic
we saved by ending the use
of plastic for Reserved and
Mohito on-line
orders



1,015 tons

less plastic
in our packaging
since 2017


SUSTAINABLE DEVELOPMENT

in LPP buildings in Poland


4,000

photovoltaic
panels on the roof
of the Distribution
Center in Brześć
Kujawski



10 years

most of the offices and
Distribution Center in Pruszcz
Gdański will be powered by renewable energy

Thanks to the Control Tower project, we implemented the carton standardization process. We have reduced the consumption of collective packaging and its reuse in the process of distributing goods to stationary stores. The reusability of cardboard boxes has increased from 10% to 50%. In the last six months alone, we have thus recovered nearly 900,000 jobs. cardboard boxes, thus saving 17,000 trees from felling.

DISCOVER OUR SUSTAINABLE DEVELOPMENT STRATEGY

SOCIAL IMPACT

Our stakeholder map allows us to implement diverse forms of stakeholder engagement. Dialogue with each of them is important to us and significantly influences ESG decision-making processes and the non-financial reporting process. In the area of customer care, we outsource production to carefully selected suppliers, taking particular care to respect ethics and human rights at workplaces. We have implemented numerous regulations and procedures in our companies to ensure a single standard for hiring and building relationships with employees. We also continuously take care of our social involvement through numerous activities of the LPP Foundation, which provides real help to people in difficult life situations and socially excluded youth. At the same time, the Foundation coordinates numerous voluntary grassroots activities and implements projects for the benefit of the local community as well as ecology and environmental protection.

SUPPLY CHAIN

We have been developing for years based on cooperation with proven and trustworthy suppliers. The framework of our partnership is governed by the LPP Quality Guidebook, which defines the quality standards of our products, and the proprietary LPP Code of Conduct, which sets health and safety standards.

Each supplier is obliged to comply with the guidelines of the Code. The document takes into account the International Labour Organisation conventions and the Universal Declaration of Human Rights. It also obliges the suppliers to care for the environment. We take care of the quality of cooperation with our partners by introducing control solutions in the supply chain. We pay particular attention to disseminating our standards among suppliers and verifying their compliance with them.

  • We work with 1,115 suppliers in Asia and Europe, fulfilling orders and enabling them to maintain jobs and production continuity.
  • We were one of the first clothing manufacturers to be included in The Worker Rights Consortium’s (WRC) list of companies that honour their commitments to the suppliers producing our collections.
  • We have conducted 609 audits of health and safety, working conditions and respect for human rights. There were 197 of them in 2020. This is a huge progress.
  • In the financial year 2021/22, we conducted 98 quality control audits in factories (audits according to the QAS – quality assurance system). This program covered 51 factories. The level of improvement of the quality control systems in the audited factories increased by 8.5%.

Safety, working conditions and quality controls in factories

PLN 34.9 mln

we invested
in total in safety in factories
for the last years. In 2021
alone, it was
5.6 million

609

audits were conducted in the
2021/22 financial year on health and
safety, working conditions and human
rights. There were 197 of them in 2020,
this is a huge progress.

13,307

quality controls
we conducted for the safety
of our products in the
2021/2022 financial
year

Production

WHAT WE DID IN THIS AREA IN THE 2021/22 FINANCIAL YEAR:

  • International Accord membership
  • Representatives of the LPP board, together with key managers from Poland and foreign companies, received training and workshops on international human rights guidelines adopted by the UN and the OECD. As a result of the actions taken, with the support of the Polish Institute for Human and Business Rights (PIPCB), in 2021 LPP developed a unified document ‘LPP Code of Conduct’ containing a catalogue of principles and commitments concerning the observance of human rights throughout the company’s value chain.
  • We continue our commitment to the Zero Discharge of Hazardous Chemicals initiative. 70% of LPP clothing produced in Bangladesh and Pakistan complies with ZDHC sustainable chemical safety standards. 25 factories in Pakistan and 72 in Bangladesh produced collections of our brands according to the ZDHC standard.
  • We have begun working with Canopy and Cotton Made in Africa to ensure that, as well as protecting the environment, the living conditions of farmers and factory workers are also taken care of.

ENSURING THE PROTECTION OF HUMAN RIGHTS AMONG OUR SUPPLIERS – KEY ISSUES:

  • Guaranteeing the safety of workers in production facilities.
  • Ensuring that they are treated with dignity.
  • Educating suppliers on the need to respect human rights.
  • Ensuring the job stability of our suppliers’ employees during a pandemic.

Workplace

The year 2021 was a time of intensive growth for the LPP Group, which necessitated recruitment on a huge scale. We also conducted a significantly higher number of internal recruitments than ever before in our history. Our employees took part in recruitment for all levels of positions – from specialist to director.

The dynamics of changes taking place in organisational structures resulted in a number of actions to maintain the efficiency of recruitment processes, employee induction and development, as well as team building and management.

  • At the end of 2021 the employment in the LPP Group was 31,808 people, 15,163 in Poland.
  • One of the biggest HR challenges in 2021 was the launch of the Distribution Centre in Brześć Kujawski and recruitment for its operations. This is a facility that will ultimately employ around 500 people.
  • We have implemented the HR Card – a new tool to help Regional HR Specialists verify and improve quality in key areas of personnel management in showrooms: recruitment, employee implementation and development, team building and management.
  • We constantly take care to minimise the gender pay gap indicator. We do not agree with differentiation of remuneration according to any diversity traits, therefore in LPP in 2021 this indicator amounted to 4%.
  • At the end of 2021, it was decided that all LPP headquarters employees will receive a 10% pay rise. In late 2021 and early 2022, work was also underway on a new remuneration policy for the sales network. In connection with the change of the tax model in Poland, the LPP management board also decided to provide compensation to all those employees who will be negatively affected by the introduced tax changes.
  • We implemented a modern LMS platform to support the creation of training content. As a result of these and other changes in the area of e-learning, employees have completed 55,000 training hours this year.
54%

of women in managerial
and executive positions
in our headquarters

87%

of women
among all our
employees

We know that the answer to rapidly changing conditions is only continuing education that develops employee potential and supports their motivation. Effective training is that which responds directly to the current problems and challenges faced by teams.

  • Onboarding new employees is facilitated by the uniform Fit Into Fashion – Onboarding standard.
  • The average number of training hours per employee in LPP SA was 18.4.
  • In the headquarters alone, 3,701 people took part in our trainings and workshops.
  • We conducted 30 workshops on cooperation in teams, between teams and on the manager-team level. These were attended by 200 people.
  • 100 new team leaders and managers participated for a total of 39 days in educational programmes for new managers and leaders on how to organise work, change management and motivation, developing feedback, or building greater financial awareness.
81,3%

of employees took up
functional and managerial
positions in 2021 as a result
of internal promotion

4,028.2

PLN million we invested in
the development of LPP headquarters
employees (on average PLN 1,471
per employee)

18.4 hrs

is the average number of hours
of training provided to each LPP SA
employee; the number for the whole
LPP Group is 4.5 hrs

LPP FOUNDATION

LPP Foundation carries out projects in 3 key areas: prevention of social exclusion and activities for the local community, health care, ecology and environmental protection.

The main beneficiaries of the Foundation’s social activities include children and young people from children’s homes, people threatened with social exclusion, the sick or disabled, people in crisis of homelessness, victims of disasters or natural disasters.

We also support social projects organised in the immediate vicinity of LPP. In 2021, the LPP Foundation made donations totalling over PLN 1.6 million. This amount includes financial donations, donations in kind, employee volunteering (including the mini-grant competition), substantive partnerships or original social programmes. Every year the scope and range of support provided by the LPP Foundation is growing.

374

volunteers have been involved
in the employee volunteer work
of the LPP Group

more than 40

charitable
organisations received
financial support

120

entities
received in-kind
support

  • By running the ‘Fashion for a Better Start’ project, we support the education of residents of 17 children’s homes. Thanks to funding from the LPP Foundation, a total of over 3,000 hours of educational, therapeutic and developmental activities were carried out between September 2021 and January 2022. The donated funds were also used for necessary medical treatment for the charges of the Gdańsk foundations. The success of the programme made the LPP Foundation decide to continue it also in 2022, allocating as much as PLN 500,000 for this purpose.
  • As part of our local activities in Brześć Kujawski, where our new Distribution Centre has been established, we carry out cyclical actions for the benefit of local communities. One of these projects is ‘School starter kit for a first grader‘ – Children starting primary school receive school supplies and gifts from LPP. In 2021, 124 students benefited from such support. Additionally, students from all primary schools participate in the ‘English with LPP’ educational programme.
  • We started cooperation with the Wosh Wosh startup – we joined two campaigns – spring (‘Donate Spring’) and autumn (‘Collection of Shoes for the Homeless’) – aimed at renovating used shoes and giving them to people in need for further use. A total of 800 pairs of shoes were collected and, after being disinfected, they were sent to, among others, the St. Brother Albert’s Society in Gdańsk, the Bread of Life Community in Warsaw and Krakow, and the ‘Prometheus’ Care and Rehabilitation Association in Gdańsk. The LPP Foundation decided to continue its cooperation with Wosh Wosh also in 2022, extending the cooperation with the collection and renovation of used clothing.
  • As part of the project carried out by Reserved, we donated funds for annual maintenance of a helpline for young people struggling with depression run by the Itaka Foundation.
  • In 2021, local social activities were also carried out by foreign companies of the LPP Group. In total, they allocated the amount of PLN 3,575,117.

CORPORATE GOVERNANCE

For the LPP Group, the year 2021 was a time dedicated to actions ordering our approach to ESG. As a result, the CEO of LPP is directly responsible for setting climate action and targets, approving projects and initiatives to reduce greenhouse gas emissions and defining the work of the ESG department. Risk assessment, including ESG risks, in particular those related to climate, is under the responsibility of the Vice President of the LPP Board.

In addition, board members participate in regular briefings on ESG and sustainability issues, prepared on behalf of LPP by expert external entities. Board representatives are also actively involved in the development of the ESG management approach. As a result, the Supervisory Board receives regular and comprehensive information from the Management Board on the company’s ESG-related activities and can issue an opinion on them.

Seeing the enormity of the challenges that still lie ahead in the implementation of the sustainability strategy and the implementation of the ESG model, in December 2021 the LPP board created the position of Director of Procurement and ESG. His/her responsibilities include planning and coordinating the implementation of responsible business standards in the LPP Group, developing and implementing guidelines in all three ESG pillars: environmental, social and corporate governance.

The Director of Procurement and ESG reports directly to the CEO of LPP. Supporting the Board and the Director of Procurement and ESG in defining ESG objectives and policies is the ESG Committee, which includes, for example, the directors of our company’s key business units.

CORPORATE GOVERNANCE
LPP SA – Relacje Inwestorskie – Materiały dla Inwestorów – Factbook

We strive to ensure transparency in our operations and clear communication with all our stakeholders. The activities of LPP SA, which is the parent company of the LPP Group, are regulated by a number of documents. For example, we comply with the new principles of corporate governance, entitled The ‘Code of Best Practice for WSE Listed Companies 2021’ (DPSN, Principles of Corporate Governance), which the WSE announced in 2021. The activities of LPP SA, which is our parent company in the LPP Group, are regulated in particular by:

• Articles of Association of LPP SA

• Regulations of the Management Board of LPP SA

• Regulations of the Supervisory Board of LPP SA

• Regulations of the General Meeting of Shareholders of LPP SA

DISCOVER OUR REPORTS

The LPP Integrated Reports, which present non-financial and financial results for LPP SA and the LPP Group, have been produced since 2017 and initially cover the calendar year. In 2019, data, as an exception, came from 13 months (from 1 January 2019 to 31 January 2020). The 2020 report covers the period from 1 February 2020 to 31 January 2021.

The switch in reporting from the calendar year to the financial year, which ends on the last day of January, increases the usefulness of the reports as this treatment better captures the seasonality of the business. Accordingly, the latest report for 2021 also covers the financial year, i.e. the period from 1 February 2021 to 31 January 2022.

LPP SA - Odpowiedzialność - Pobierz Raport CSR

The full report for 2021/22 can be found here:

Download the report