Traceability of the supply chain

Traceability is a cornerstone of supply chain management. At Inditex, we work with external suppliers and their factories with the aim to guarantee that every item is manufactured in maximum compliance with legislation on labour, the environment and product health and safety.

Traceability is even more important in the context of the sustainability of a global supply chain such as Inditex’s. By identifying every production unit, Inditex is capable of carrying out programmes that contribute to the UN Sustainable Development Goals, including SDG 8 (decent work and economic growth) and SDG 12 (responsible consumption and production). This is because all of the Group’s sustainability policies and standards – such as the Code of Conduct for Manufacturers and Suppliers, and product health and safety standards Clear to Wear and Safe to Wear, as well as the environmental strategies Water, Biodiversity, Energy and Climate Change – apply to all suppliers and factories that make up the supply chain. So identifying suppliers and manufacturers is critical, whether they come from the first level of suppliers that have a direct business relationship with Inditex or from other manufacturing levels.

In 2015, the Group’s 1,725 direct suppliers registered 6,298 factories involved in production, where awareness-raising and sensitization campaigns were jointly run. Registration of fabric factories increased as a result of the emphasis placed by Inditex teams on ensuring traceability right up to the last link of the chain.

In 2015, work was done to standardize methods of ensuring traceability, collecting the best practices from the teams working to verify traceability. The goal is to develop a comprehensive and standardized model with the maxim that traceability must always be guaranteed and must satisfy the needs of all of the company departments involved in its management, which include sustainability teams, departments dealing with logistics, and purchasing.

Inditex is also working hard on the identification of raw materials, developing a number of different projects and initiatives in this sphere. For example, Inditex’s Forest Product Policy ensures the traceability of raw materials deriving from forestry in order to avoid using materials from primary or endangered forests, illegal felling, or forests providing a habitat for endangered species. The Group works with the major global suppliers of forest-based artificial fibres such as viscose, modal and lyocell to ensure that only fibre complying with this policy is used in the products sold by Inditex.

Number of suppliers with purchase and factories in 2015 (*)

ASIA 836 suppliers 2.252 factories AFRICA 130 suppliers 316 factories AMÉRICA 74 suppliers 234 factories EUROPE (NON-EU) 185 suppliers 1.410 factories EUROPEAN UNION 500 suppliers 2.086 factories

Factories in proximity

40% 60% Factories in proximity (EU, Europe -non-EU- and Africa) Other regions

Factories by main activity

66%Manufacturing 5%Cutting 10%Fabric 9%Finishing 3%Printing 7%Dyeing and washing

(*) Suppliers of fashion items, mainly clothing, footwear and accessories, with a production for Inditex of over 20,000 units. Suppliers with smaller production account for 0,37% of total production. Textile, footwear and accessories factories declared as active by suppliers of fashion items – mainly clothing, footwear and accessories – with a production of over 20,000 units.

658fabric 317cutting 4.136manufacturing 420dyeingand washing 213printing 554finishing 1,725 suppliers* 6,298 factories** RtM audits RtM auditsGtW audits Pickingprogramme IDENTIFICATION ASSESSMENT OPTIMIZATION SUSTAINABILITY POLICIES AND STANDARDSCode of Conduct for Manufacturers and SuppliersProduct health and safety standards Clear to Wear (CtW)and Safe to Wear (StW)Environmental strategies: Water, Energy and Biodiversity TRAINING AND MANAGEMENTOF INFORMATIONContinuous training of suppliers and purchasing teamsInformation system in which suppliers report on the factories that carry out production, covering all processes and manufacturing levels AUDITSPre-Assessment / Social / Special / Traceability / Product Health and Safety (RtM: Ready to Manufacture) /Environmental (GtW: Green to Wear) All suppliers are required to register the factories involved in production, allowing Inditex to verify their production capacity. By doing so, Inditex expects to monitor its worldwide supply chain and minimizes the possibility of outsourcing. TRACEABILITY CONTINUALIMPROVEMENTOF THE SUPPLYCHAIN WORKIN SUPPLIERCLUSTERS CODE OF CONDUCTCOMPLIANCE PROGRAMME ENVIRONMENTALSTANDARDS,CtW AND StWCOMPLIANCE Corrective Action Plans Training and capacity building for suppliers and manufacturersAwareness-raising for design and purchasing teams Collaboration with stakeholderssuch as: NGOsLocal governmentsTrade unionsInternational platformsUniversities Online manufacturermanagement systemTraceability audits Pre-assessmentaudits Socialaudits Special audits Social Environmental Product health and safety

(*) Suppliers of fashion items, mainly clothing, footwear and accessories, with a production for Inditex of over 20,000 units/year with purchase in 2015.

(**) Textile, footwear and accessory factories declared by suppliers in the manufacturer management system for orders in 2015. For those factories involved more than one process, figures refer to the main process performed.