While all Performance Standards are applicable to this investment, IFC's environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards

PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and Working Conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 - Community Health, Safety and Security

This is a category B project according to IFC's Policy on Environmental and Social Sustainability because a limited number of specific E&S impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards and guidelines. The E&S impacts that are expected to occur among Wolverine's suppliers are related to labor practices, including potential child labor, forced labor, occupational health and safety, wages, overtime, grievance mechanism, and overall safe and fair employment conditions; life and fire safety (including emergency response); emissions to air and water, hazardous materials management and use of energy and water. In addition, for the shoe manufacturing sector, management of supply chain issues on sourcing of materials such as rubber and leather are of relevance.

IFC's appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.

Environmental and Social Assessment and Management System and Policy Wolverine has three types of relationships with factory partners: direct sourced factories, agent-sourced factories, and licensee-sourced factories. Licensees are responsible for sourcing their own factories and ensuring their factory partners are in compliance with the Production Code of Conduct as outlined below. Direct sourced and agent sourced factories will be part of the IFC GTSF program. Licensee factories mentioned above will not be included in the IFC Program. The company considers numerous factors in selecting new production partners (both direct sourced and agent sourced), such as location, manufacturing capabilities, reputation, and most importantly the ability to comply with the Company’s Production Code of Conduct (the “Code”) , which tracks with the Footwear Distributors and Retailers of America’s (FDRA) Production Code of Conduct in all material respects, and with the latter being publicly available. The Code clarifies the minimum standards suppliers and factories need to comply with such as following ethical business standards, compliance with all applicable environmental, health and safety laws and regulations, commitment to use environmentally safe practices, treating employees fairly with respect to wages, benefits and working conditions, ensuring no use of child or prison labor, amongst other. Any violation of the law or the Code may be viewed as a breach of the Manufacturing Agreement between WWW and the supplier and / or factory and could lead to the termination of the associated business relationship. Identification of Risks and Impacts All production partners receive a copy of the Code and a new factory orientation visit is undertaken which further communicates the Social Compliance Program requirements and auditing process that they will be subject to. For direct source suppliers which represent approximately 95% of total footwear volume, factory visits are conducted by Wolverine representatives. Factories which are represented by agents are sometimes selected without a physical visit by WWW. In those instances, a Social Compliance Audit is conducted by third party audit firms and an associated corrective action plan (CAP) is provided for Wolverine’s review and approval. Wolverine is also a member of Sustainable Apparel Coalition (SAC). The SAC is the apparel, footwear, and textile industry’s leading alliance for sustainable production. It is the developer of the Higg Index, which is a tool used to measure the social and environmental performance of brands and retailers, products and facilities. To help the company conduct business ethically and in compliance with applicable laws and regulations, WWW operates an ethics hotline known as the Wolverine Reportline – a confidential and anonymous tool that can be used by everyone, including workers associated with production partners and Wolverine itself, for reporting possible violations of the Wolverine Worldwide Code of Business Conduct, national law, or suspected unethical practices. Organizational Capacity At the leadership level, Wolverine has a Responsible Sourcing Team headed by a Director. The team serves the regions in which its supply chain operates, with teammates in Central America and Southeast Asia, as well as the United States. Wolverine utilizes a combination of internal and external auditors for monitoring suppliers and factories. The company have five internal auditors, based in China and Vietnam, and supplemented by industry-leading third-party audit firms who assist with Wolverine’s audit program. Emergency Preparedness and Response The Code has detailed guidelines on fire and emergency preparedness. Factories are required to be in possession of all legally required and valid permits and certificates related to fire safety inspections and an adequate number of employees need to be trained in first aid and firefighting techniques; the latter aims to empower workers to advocate for strong awareness on the importance of fire prevention and protection, and to focus on changing behaviors across all levels of a factory. The Code also requires evacuation drills to be conducted regularly, with roles and responsibilities clearly defined, at least every 90 days or more often where required by law. Monitoring and Review Wolverine conducts social compliance audits of all its factory partners through both internal auditors and thirdparty audit firms to monitor compliance with the Code. The factories are subject to annual audits. The core production partners, which represent approximately 80% of the volume, are audited three times per year, with two audits generally conducted by the internal team and the third conducted by a third-party firm. The audits are scored on a 100% scale and the audit criteria include the following: overall performance and commitment, slavery, trafficking, and forced labor, harassment, abuse, and discrimination, child labor, juvenile workers, and pregnant workers, industrial relations, wages and legal benefits, working hours, recruitment and contracts management, safety, occupational health management, environment and monitoring and compliance. Factories found to be less than fully compliant are provided with a period of time to address the associated corrective actions following which there is a reaudit. Factories that score below the required threshold and do not improve performance within a reasonable timeframe, are no longer utilized. Several of Wolverine’s audit criteria – such as child labor, slavery, trafficking, and forced labor – are zero tolerance and a factory is not allowed a corrective opportunity

Working Conditions and Management of Worker Relationship The Code requires alignment with core elements of IFC's Performance Standard 2 and has adequate provisions related to terms of employment, including compensation and benefits, collective bargaining, non-discrimination, no harsh or inhumane treatment. It specifies that overtime must be on a voluntary basis and shall not be demanded on a regular basis and shall be compensated at a premium rate as required by local laws. Any type of child or forced labor is forbidden by the Code, as well as any type of discrimination. It promotes the overall respect of universal human rights and ethical behavior, respects the right of employees to freedom of association and collective bargaining. Other provisions covered by the Code include requirements for a workplace to be safe and healthy; and the work environment protecting and preserving environment. The Code maintains a zero-tolerance policy with respect to human rights violations including slavery and human trafficking, forced labor, child labor, life-threatening health and safety conditions, harassment, and discrimination. The presence of these violations at a factory location would exclude the supplier from its supply chain. The Code also requires the suppliers to respect the rights of workers to freely and peacefully associate and collectively bargain. Where the right to freedom of association and collective bargaining is restricted under law, it is the responsibility of the employer to facilitate the development of parallel means for independent and free association and bargaining. It further mentions that the suppliers must not engage in, support or tolerate discrimination in employment including recruitment, hiring, training, working conditions, job assignments, pay, benefits, promotions, discipline, termination or retirement on the basis of gender, age, religion, marital status, race, caste, social background, diseases, disability, pregnancy, ethnic and national origin, nationality, membership in worker organizations including unions, political affiliation, sexual orientation, or any other personal characteristics. The Code strictly prohibits physical abuse or harassment, threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation. The Policies and the Code are communicated to all staff and workers at the factory during orientation and when policies are implemented or updated. Grievance Mechanism Wolverine requires factories to have a formal communication system, including grievance procedures, to be established, properly implemented and communicated at all levels, allowing for anonymity. The Code also states that the workers should be able to report inappropriate or discriminatory behavior to someone other than their supervisors and also requires the confidentiality of the grievance process to protect employees from retaliation for reporting harassment or abusive behavior. Body searches, if necessary, are gender appropriate. WWW’s grievance mechanism also includes a global reporting hotline to submit a grievance by phone or email and it may be submitted anonymously if desired. In addition, worker interviews conducted through the Social Compliance Program also addresses grievances. All reports received through these mechanisms are thoroughly investigated and appropriate action / corrective actions implemented where policy violations are found. The factories are also required to communicate the policies and procedures on acceptable and unacceptable disciplinary practices. All disciplinary actions are documented to demonstrate compliance. Occupational Health & Safety On health and safety, the Code requires the factories to provide their employees with a safe and healthy working environment. They are required to comply with all applicable workplace conditions, safety and environmental. laws rules, regulations, and standards. Implementation of health and safety management systems are monitored during compliance audits. Instances of non-compliances are addressed through corrective action plans and are part of the supplier's scorecard assessment. The Code also sets the health and safety standards for the dormitories, requiring separate accommodations for males and females, safe, hygienic living environments for workers, compliance with all legal regulations regarding residential facilities, and ensuring they meet the basic needs of the workers. Impact of COVID-19 COVID-19 had impacts on the apparel industry as well as disruption on the supply chain due to reduced demand. Factories had been advised to follow government guidance on closures and reopening. Some Wolverine suppliers have taken measures to protect its workforce to ease the burden of temporary closures and reduced production. When retrenchment has been the last option, suppliers are required to follow applicable local requirements. The company distributes its products to a variety of customers, many of which are deemed essential, including customers in the health and safety, critical construction, food and agriculture, and energy sectors. As a result, the majority of the company's distribution facilities have continued operating since the COVID-19 pandemic began. In order to keep distribution facilities open, the company invested in creating physically safe work environments for employees.

The Code requires factories to comply with all relevant local and national environmental protection laws at a minimum. This includes having all the required environmental permits, handling of chemicals and disposal of solid and liquid wastes complying to the local laws, with a goal to meet international environmental protection standards. Wastewater and solid waste generated from operations, industrial processes and sanitation facilities are to be characterized, monitored, controlled and treated as required by local law prior to discharge or disposal. The factories are required to adhere to WWW requirements regarding prohibition or restriction of specific substances, including requirements for labeling, recycling, and/or disposal. WWW expects factories to work towards the elimination of discharge of hazardous chemicals in the supply chain. As a SAC member, Wolverine utilizes the Higg Facility Environmental Module (Higg FEM) to manage its environmental performance which standardizes how facilities measure and evaluate their environmental performance, year over year. The Higg FEM measures energy use and greenhouse gas emissions, water use, wastewater, emissions to air (if applicable), waste management, chemical use and management. These modules measure impacts at individual factories, not the supplier company as a whole. Users conduct the assessments at least once a year, and these assessments are then verified by SAC-approved, on-site assessors. Benchmarking by facility type allows facility managers to compare their performance against that of their peers. This information is to be incorporated into the company’s quarterly factory scorecard, beginning in quarter 1 of 2021, to give sourcing teams greater visibility into environmental sustainability performance. Wolverine has been a member of the Leather Working Group (LWG) since 2006. LWG has worked to improve the leather manufacturing industry by creating alignment on environmental priorities, establishing best practices, and providing guidelines for continuous improvement. In 2019, approximately 98% of leather collectively used by WWW’s brands came from Gold- or Silver-rated tanneries, the two highest ratings offered by the LWG. Gold- or Silver-rated tanneries have scored at or near the very top in five categories related to best practices of environmentally responsible leather production. As a result of driving large volumes through the highly rated tannery partners and expectation of continuous improvement for all suppliers, WWW achieved an estimated savings of more than 450 million liters of water and 50,000 megawatt hours of energy. GHG Emissions Wolverine is committed to reducing GHG emissions and have been supporting suppliers to implement initiatives to improve energy efficiency and increase the use of renewable energy. GHG emissions for the individual factories are not been disclosed and they rely on the Higg Index to monitor the same.

The use of security services at factories is part of the scope assessment of legal compliance of its factories, as well of the applicable Code and benchmarks e.g., Customs-Trade Partnership Against Terrorism (C-TPAT)). Wolverine works with relevant stakeholders and provide guidance to factories so that its security arrangements are in line with the Voluntary Principles on Security and Human Rights.

Wolverine strives to listen and engage with all its key stakeholders through meetings, conferences and summits to respond to potential incidents in their supply chain.
As noted above, the company has a global hotline which can be used to report grievances and there is a mechanism to ensure they are addressed.

Contact Person: Steve Tanyko (Treasury Director)
Company Name: Wolverine World Wide Inc.
Email: Steve.Tanyko@wwwinc.com
Phone: +1-6168665546

Broad Community Support is not applicable for this project.