Good governance, corporate ethical culture and solid compliance architecture

At Inditex we define corporate governance as the manner in which enterprises are organised, run and controlled. In 2021 we designed and implemented a new corporate governance model (which is being implemented gradually and will be fully operational by 1 April 2022), in which the roles of the Chairman and CEO have been separated and the role of Chairperson, in this instance Chair, will no longer be executive.

Inditex’s Board of Directors, on the basis of a favourable report from the Nomination Committee, agreed last November to appoint Marta Ortega Pérez as the Company’s new Chair. She will serve on the Board as a proprietary director and her appointment is due to take effect on 1 April 2022. In parallel, Óscar García Maceiras, formerly the Company’s and Board’s General secretary, was named CEO of Inditex.

The new organisational structure includes a Management Committee, which will coordinate the Company’s management, and support the CEO in his executive duties.

The Group’s sustainability commitments emanate from the very top of the Company: Inditex’s highest governing bodies layer sustainability into all their decision-making. The Board of Directors has a dedicated Sustainability Committee tasked with supervising and controlling social, environmental and product health and safety related sustainability proposals.

As a result, the definition and fine-tuning of the Group’s corporate strategy factors in the opportunities, risks and impacts deriving from the sustainability thrust and the procedures for establishing, measuring and attaining the key sustainability targets.

Elsewhere, Inditex’s Diversity and Inclusion Policy, approved in 2017, fosters the values of diversity, multiculturalism, acceptance and integration at all Group entities and is likewise spearheaded at the very highest level of the Company.

To that end, in 2021 Inditex's Nomination Committee continued to work hard to maintain the highest levels of female representation. Specifically, in December 2020 the Committee set the target of lifting female boardroom representation to 40% before the end of 2022. The recent appointments of Marta Ortega and Óscar García Maceiras deliver and surpass that percentage.

Inditex's Compliance System is designed to evidence how robust our commitments to strong governance and social and environmental sustainability are, and to transmit our culture of business ethics to all our stakeholders, pushing for respect for fundamental human and labour rights.

That system has materialized in the approval and publication of a body of internal rules and regulations that reflect our ethics culture. The most important of those rules are the Code of Conduct and Responsible Practices for Group employees and the Code of Conduct for Manufacturers and Suppliers for Inditex’s supply chain participants.

Work began in 2021 on updating the Code of Conduct and Responsible Practices in order to align its contents and structure with new realities, the commitments assumed on the sustainability front and the Group’s digital transformation.

At Inditex, we are firmly committed to preventing compliance risks posed by the third parties with which we engage directly. Our Due Diligence Policy, approved by the Board of Directors in 2019, seeks to align our relationships with business partners, suppliers and major customers with the processes set down in ISO 37001, the international standard for anti-bribery management systems, as well as other stringent anti-corruption rules and regulations.

Our due diligence process entails identifying and analyzing all suppliers, business parties and third parties with which Inditex has business dealings through the prism of corruption, fraud, international trade sanctions and/or any other source of reputational or similar risk.

Since the beginning of 2020, all suppliers and other third parties initiating a commercial and/or professional relationship with Inditex have to go through that due diligence screening process. During the second half of 2021 work began on re-certifying suppliers that have been working with us since before 2020, putting them through the applicable process under Inditex’s due diligence rules. That process is expected to finalise during the first half of 2022.