2. Master Plan for Water Management in the Supply Chain

Inditex's commitment to sustainable development, environmental protection and protection of natural resources remains one of the company's core values. Within the framework of the strategic plan, Sustainable Inditex 2011-2015, steps have been taken to integrate sustainability into the Group's supply chain to an even greater extent. These steps are outlined in the Global Water Management Strategy which includes the Group's commitment to reach "zero discharge", in 2020, an initiative that is promoted by Greenpeace and is based on the acceptance of coherent global commitments, such as the U.N. CEO Water Mandate.

Global Water Management Strategy

Water is one of the most valuable resources for life on Earth. Inditex is aware of its fundamental importance as part of our ecosystems. Inditex's environmental policy and, more specifically its Water Strategy, stipulates the guidelines marked by the Group to promote sustainable water management in its activities.

The Water Strategy includes the Water Master Plan for Water Management in the Supply Chain which is used to guide the efforts of Inditex and its suppliers in the sustainable use of this vital resource. One of the elements Inditex considers fundamental in the work carried out in tandem with its suppliers is the commitment to Zero Discharge of Hazardous Chemicals (ZDHC). Inditex is a member of the group that promotes this commitment (Join Roadmap to ZDHC).

Inditex, along other leading brand names and distributors in the fashion industry, is working to achieve “zero discharge” of hazardous substances by 2020. The Group recognises that this commitment goes far beyond the current international legislation and, therefore, requires collaborative efforts if we are to bring about a systemic change that will lead towards a cleaner industry.

Guide for the Use of Chemicals in Production Processes to achieve Zero Discharge

Inditex's commitment regarding the use of chemical substances in the manufacture of its products is included in the Guidelines governing the use of chemical substances in Inditex's production processes, that establishes retrictions and prohibitions in the use of these substances, which are binding for all suppliers, guaranteeing strict compliance with the most exacting standards and with the limits established by the international legislation in effect. To guarantee compliance with “zero discharge” on Inditex’s supply chain, the Group carries out audits, corrective action plans and training sessions on the production processes as well as continual checks on the products it sells.

The main objective of the Guidelines for the use of chemical substances in Inditex's production processes is to ensure that chemical products are correctly managed and controlled along the entire supply chain and thus achieve “zero discharge” by 2020.

The Guidelines for the use of chemical substances in Inditex's productive processes is based on the following principles which are to be enforced by both manufacturers and suppliers:

1. Appropriate management of chemicals in the manufacturing process. All chemical products must be handled, moved, stored, recycled or reused, and eliminated in the proper fashion. The containers used to hold chemical products must be correctly labelled and the chemical safety cards for each product must be available.

2. The Restricted Substances List (RSL) in Products. Inditex regulates the use of chemical substances that may appear in a product through its Clear to Wear standard.

3. Manufacturing Restricted Substances List (MRSL). In addition to regulating the substances mentioned in Clear to Wear, Inditex forbids its manufacturers and suppliers from using alkyphenols, among other substances, when manufacturing its products.

4. Promoting Green Chemistry. There are numerous alternatives to the substances included in the RSL and the MRSL. Suppliers and manufacturers shall ensure alternatives that are free from substances restricted by Inditex are used in all their processes.

5. Correct water management. Manufacturers and suppliers shall supervise the consumption of water employed in its operations in order to optimise use. Waste water shall be properly treated and controlled before disposal.

Capacity building to achieve “zero discharge”

In keeping with its commitment towards achieving “zero discharge” by 2020, and in the framework of the Green Code project, Inditex has set up a project to assess and advise the supply chain as regards the use of chemical substances. Thanks to this project it is possible to work closely with suppliers and factories to guarantee compliance with Inditex's Chemical Substances Guide. The project is expected to include 100 Inditex suppliers, 40 of which are in China and the rest in a number of other countries, such as India and Bangladesh.

The technical training project for Inditex's supply chain in order to achieve “zero discharge” has three separate phases:

1. This phase deals with informing the suppliers, studying their supply chains and assessing their degree of knowledge and the extent to which Inditex's chemical substances guide is applied.

2. This phase includes an exhaustive investigation of the chemical compounds found in the water entering and leaving the installation. 11 priority groups of chemicals are analysed.

3. This phase addresses technical training and improved performance in terms of chemical and water management.

The project´s methodology and results are available to the public on a web platform prepared for this purpose.

www.wateractionplan.com