California Transparency in Supply Chains Act of 2010
Corporate Disclosure

The California Transparency in Supply Chains Act of 2010 (SB 657) requires California businesses to disclose their efforts to address the issues of slavery and human trafficking, thereby allowing consumers to make better, more-informed choices regarding the products they buy and the companies they choose to support.

Balenciaga has taken steps to evaluate the risks of forced labor in our supply chain. Within Balenciaga, procurement falls into two broad categories: (1) sourcing of raw materials such as textiles and leather; and (2) procurement of other types of goods and services to support the day-to-day running of our operations, such as energy, manufacturing, and office equipment. Although the social impact of the goods and services that Balenciaga purchases often lies outside our direct control, where possible, we have taken proactive steps to ensure the absence of slavery and human trafficking in our supply chain.

Balenciaga is part of Kering (formerly “PPR”), which has certified several of its businesses under Social Accountability International’s (SAI) SA8000 standard. SA8000 sets out a strong approach concerning forced labor and provides guidance to suppliers and business partners regarding responsible sourcing. SA8000 includes an endorsement by the International Labour Organisation (ILO) Conventions and the Universal Declaration of Human Rights. Among other things, SA8000 specifically forbids the use of forced or involuntary labor as defined in ILO Convention 29, including employment of people under the age of 15, unless a higher age is required by law, in which case the higher age applies. While several of Kering’s businesses have certification under SA8000, Kering continues its commitment to bring all of its businesses into compliance with SA8000 and obtain certification.

As part of SA8000, Balenciaga’s suppliers, subcontractors and subsuppliers will be required to make a written commitment to all SA8000 requirements, participate in monitoring activities as requested by Balenciaga, promptly resolve any nonconformance with SA8000, and notify Balenciaga concerning any relevant business relationships. Moreover, by virtue of our adherence to SA8000, Balenciaga will be subject to announced and unannounced audits to determine compliance with the SA8000 standard, and Balenciaga’s suppliers are subject to the same. Kering’s standard supply agreements refer to and adopt the SA8000 requirements, obligating its suppliers to comply with the standard. The brands of Kering also often use several of the same suppliers, subcontractors and subsuppliers, so to the extent that certain businesses of Kering are already certified, other businesses of Kering that are not yet certified have been well positioned to be in compliance with SA8000 and obtain formal certification.

Kering’s internal policies also articulate its determination to rid its supply chain of human trafficking and forced labor. For example, Kering’s Code of Ethics states that its businesses will not tolerate child or forced labor in the production of its products.

Balenciaga expects and depends on our managers and employees to uphold a zero-tolerance policy regarding forced labor. As such, Balenciaga has taken steps to increase employee awareness and compliance regarding slavery and human trafficking issues. Kering’s Code of Ethics is provided to all employees and suppliers. Employees are encouraged to report violations of the Code of Ethics. Moreover, as part of SA8000 certification, the standard will be displayed at business locations to inform personnel about Kering’s voluntary commitment to this standard and its requirements. Kering will provide a confidential way for Balenciaga personnel to report nonconformance with SA8000 to management and, where appropriate, Balenciaga provides and requires specific training programs regarding supply chain issues.