Policy: Netshoes demonstrates a strong concern for environmental and social performance, as evidenced by a wide range of actions taken over recent years. The company, however, does not currently have in place a single, comprehensive policy regarding its approach to identifying, mitigating and/or managing its principal risks and impacts across all of its operations. Rather, it has several components of an approach in key operational areas (as described below) that have yet to be fully integrated and communicated explicitly throughout the organization or externally as a visible policy on sustainability. In Brazil, Netshoes has defined policies and procedures to manage human resources and occupational health and safety (OHS) performance. In Mexico and Argentina, the company has not yet formalized its policies and procedures. In accordance with the ESAP, Netshoes will therefore develop comprehensive environmental and social policies and procedures at the corporate level – to be approved by its board – and communicate them widely throughout the organization and to key stakeholders. An overarching, corporate-level policy guiding Netshoes'' practices will be adopted by July 30, 2015, and more specific policies and operational procedures will be adopted according to the dates specified below. While the IFC''s interest is that key environment and social issues be addressed in these policies, Netshoes will also consider including clear statements about how it safeguards the privacy of its customers'' data, in line with the recent passage of the Civil Rights Framework for the Internet in Brazil (see below).
Identification of Risks and Impacts: Given the nature of Netshoes'' operations, national laws under which the company operates in Brazil, Argentina, and Mexico do not require Environmental Impact Assessments or equivalent studies, environmental permits, or environmental and social action plans for its operations. Nonetheless, Netshoes adheres scrupulously to local regulatory requirements for necessary operating permits. In the case of Brazil, these are primarily local fire safety certificates to ensure that Netshoes facilities have proper fire safety and emergency response plans in place for its three distribution centers and its corporate office. Netshoes complies with similar requirements in Argentina and Mexico for its distribution centers and administrative offices. Each business unit is required to monitor its operating permits validation and expiration dates. At the corporate level, these are monitored by Facilities, Human Resources and Legal Departments.
The company otherwise complies with regard to two regulated aspects of Netshoes'' business – handling some items considered to be health-related products and conforming with Brazil''s new "Marco Civil da Internet," or the Civil Rights Framework for the Internet (officially known as Law 12965 of April 23, 2014). With respect to the first issue, Brazilian federal health authorities, ANVISA, requi
re that Netshoes has a certificate for the proper storage and distribution of certain items considered to be health-related products, such as nutritional supplements and certain equipment and clothing. The company has duly created segregated areas in its distribution centers for controlled access to and specialized handling of such products. Its ANVISA certificates, first issued in 2012, have recently been renewed, and these are subject to review and inspection. In Mexico and Argentina, the company does not handle health-related products. With regard to the Brazilian Civil Rights Framework for the Internet, the company has done the following to comply with the new law''s requirements: (i) reviewed the Terms and Conditions of Use that users agree to prior to a purchase; (ii) re-assessed its systems to guarantee that personal data is not inadvertently shared with third parties; (iii) begun reviewing its disclosures to customers on data collection (cookies); and (iv) worked on mechanisms to delete unnecessary data when requested by clients (however, purchase-related data continues to be stored in accordance with existing tax, civil, and consumer laws). As noted above, the IFC recommends that its public sustainability policy also refers to measures that Netshoes has adopted or is adopting to safeguard the privacy of customer data in order to comply with Brazilian legal requirements.
With regard to the company’s supply chain, although Netshoes works with approximately 100 suppliers, about 80% of its products come from 4-5 well-established global brands, such as Nike, Adidas, Asics, and Puma. These global brands are well-acquainted with compliance and reputational risks in footwear manufacturing supply chain, and they have taken steps to create policies, oversight procedures, and auditing mechanisms to guard against poor labor conditions and/or environmental liabilities in their supply chains. It is therefore with regard to smaller producers or suppliers involved in Netshoes'' own-brand products that the company is seeking to exercise the greatest oversight on supply-chain integrity. Netshoes establishes contractual obligations for its suppliers related to labor and working conditions, anti-corruption, and environmental compliance (see below under PS2 – Supply Chain). For direct imports the company requires the supplier to either allow audits or to present international certificates accepted by Brazilian, U.S., and European authorities. In addition, the company has a Sale Purchase Policy (Política de Compra e Revenda) with operational guidance that involves the registration and auditing of suppliers. All factories within Brazil that work directly for Netshoes with respect to its own brands are inspected by SGS or Intertec to ensure that they follow best practices for workplace conditions, in accordance with the Business Social Compliance Initiative (BSCI) standards. In order to formalize all of these practices and better manage E&S risks within its s
upply chain, Netshoes is therefore required under the ESAP to establish a written policy and related procedures within the company’s management system for monitoring E&S issues in its primary supply chain on an ongoing basis by September 30, 2015.
Management Programs: The company has begun a systematic process of standardizing its internal processes and procedures. This process has involved creation of new units (see below), and it includes formalizing procedures at the corporate level on supply chain, occupational health and safety, human resources, and environmental management, among other issues. This overall initiative, supported in part by external consultants, aims to ensure that the company operates in a structured, optimal fashion by the end of 2015. As part of this process, the company has issued key policies and guidance, such as the Code of Ethics (Código de Ética) and purchasing policy referred to elsewhere in this review.
Under the ESAP, Netshoes will formalize, based on the E&S policies and procedures to be developed at the corporate level, programs to manage waste generation and disposal, energy efficiency, and occupational health and safety for all of its units by July 30, 2015.
Organizational Capacity and Competency: Netshoes has established various units related to the company''s environmental and social performance, including a legal/compliance office, an HR department, an OHS function, and an internal auditing function. The senior managers and mid-level staff whom the IFC met are all well-trained, well-seasoned professionals, often with years of experience in their areas. The move toward greater centralization of corporate functions aims to ensure that the company''s policies, standards, and procedures are clearly articulated and consistently applied, and corporate staff provide support and oversight for site-level processes, procedures, and staff. However, this is a work in progress, and no single part of the organization assumes full responsibility for coordinating actions related to environmental and social performance. Therefore, under the ESAP, Netshoes will designate by February 28, 2015, a senior company official (and if appropriate, a committee at the executive and/or board level) to serve as the focal point and principal coordinator of its E&S functions.
Training: Netshoes has a consolidated approach to training for each business unit. This approach is based on the (i) identification of training needs for the company’s personnel (health and safety, career development, IT, environmental awareness, sales, customer relationship, etc.); (ii) development of annual training plans to address the defined needs (Plano Anual de Treinamento); and (iii) documentation of the training received.
Emergency Preparedness and Response: Netshoes has a well-developed approach to emergency preparedness and response. All facilities are required to have emergency plans in compliance with relevant norms on emergency preparedne
ss and fire safety, as well as trained emergency response teams. All facilities in Brazil have fire safety certificate (Auto de Vistoria do Corpo de Bombeiros – AVCB). In Argentina, Netshoes has fire safety and evacuation plans (Plan de Carga de Fuego and Plan de Evacuación), and in Mexico the company’s Safety Program is registered with local authorities. OHS permits and certificates are monitored at country level. All business units have OHS technicians, who are also responsible for the implementation of emergency and fire safety plans.
At the facility visited by IFC – the company''s largest distribution center – a thorough and comprehensive fire safety program has been put in place that goes beyond local regulatory requirements. Fire response teams drawn from Netshoes have been organized and trained for all shifts, and over and above local fire safety requirements, the company has also hired full-time firefighters/first responders to provide daily coverage and support at this facility. In Mexico, the emergency response team was trained in 2013 on "First Aid and CPR" as well as "Fire Control" and "Evacuation in Case of Fire, Earthquakes, and Other Emergency Situations." In Argentina, the company has developed manuals and provided employees with training on fire safety, responding to accidents, and the like.
Under the ESAP Netshoes will establish at the corporate and country levels, by July 30, 2015, a system for monitoring each facility''s: (1) fire safety certificate; (2) emergency response plans; (3) crisis management and emergency response teams; and (4) the status of yearly trainings for emergency response staff. In addition, in the event that Netshoes leases any already-built distribution facilities, it will incorporate them into this monitoring system. In the event that Netshoes commissions the construction of any distribution facilities, it will ensure that the design of the facility and its planned fire prevention and firefighting systems conform not only with local regulatory requirements but also with any international life and fire safety norms (such as NFPA 101) for such facilities.
Monitoring and Review: Netshoes has a company-wide commitment to continuous improvement of the E&S management practices. In Brazil, the company has defined targets and indicators to measure energy efficiency and water consumption, as well as a human resources dashboard comprised of several HR indicators. Each business unit is required to monitor its environmental, health and safety and human resources performance, and the Facilities Manager at the corporate level (based in Brazil) is responsible for overseeing all indicators (although Mexico does not monitor energy, water or paper consumption as it is not required to by local law). With regard to the Brazilian Civil Rights Framework for the Internet (as mentioned above), the company has been reviewing its procedures to comply with Law 12965 of April 23, 2014.
Under the ESAP Netshoes will esta
blish at the corporate and country level, by July 30, 2015, a comprehensive monitoring system (with regard to occupational health and safety, human resources, and environment), including E&S permits and licenses (see above under Management Programs).
External Communications and Grievance Mechanisms: With regard to external communications and grievance mechanism, there are specific channels for workers, clients, suppliers, business partners, among others, to communicate cases of non-compliance with the Code of Ethics or any other type of grievances to the company. In Brazil grievances can be lodged through the website, by email or via a toll-free telephone number. An Ethics Committee comprised of management representatives is responsible for implementation of the Code of Ethics, including grievances filed through the complaints channels, and to address any instances of non-compliance.
In accordance with the ESAP, Netshoes will develop at the corporate level, by September 30, 2015, a formal procedure for receiving, managing, and processing external complaints in all three countries. The mechanism should include methods to: (i) receive and register internal and external communications; (ii) screen and assess the issues raised and determine how to address them; (iii) provide, track and document responses, if any; and (iv) adjust the company''s practices as appropriate. There should be greater clarity regarding the communications channels available for the company''s diverse stakeholders to access the grievance mechanism. The grievance mechanism procedure will be formally communicated and implemented throughout all business units.
Ongoing Reporting to Affected Communities: Ongoing reporting to Netshoes'' stakeholders is one area that has not been developed in the company''s approach to managing environmental and social risks. The group currently has no consolidated external report on environmental and social performance, whether as part of its annual report, as a stand-alone publication, or as a detailed area of its public website. Therefore, under the ESAP Netshoes will begin reporting publicly on an annual basis regarding the key risks, impacts, indicators, and other aspects of environmental and social performance by March 31, 2016 (to cover calendar year 2015), and it will seek to use this public reporting as a means for engaging with and informing its principal stakeholders of its approach and activities in this realm.
