Annual Report 2021

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Sustainability

Sustainability as an integral part of business activities

Strong commitment to climate neutrality, circularity, and RESPONSIBLE styles

Renewed inclusion in the Dow Jones Sustainability Index World and Europe

HUGO BOSS is conscious of the economic, ecological, and social impacts of its business activities along the entire value chain. The sustainability activities of HUGO BOSS aim to generate added value for the Company, its employees, shareholders, customers, business partners, and society, thereby ensuring long-term success for the Company. For HUGO BOSS, sustainable business activities mean guaranteeing the traditionally high quality and longevity of its products at all times, while ensuring that they are made in a socially and environmentally friendly way.

Highlights NEW Materials – Responsible Collection (photo)

NEW Materials

Sustainability is at the core of HUGO BOSS. We are looking for best‑in‑class solutions having a measurable impact on the environment, aiming at climate neutrality and establishing a circular business model.

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Within “CLAIM 5”, HUGO BOSS considers sustainability as an important foundation of its strategy and thus as an integral part of its business activities. The Company’s ambitious sustainability targets are therefore firmly anchored in the Group strategy. In this context, the Company will intensify its diverse sustainability activities, particularly in the areas of climate neutrality and circularity, which also includes actively involving its customers. With its clear commitment to sustainability, HUGO BOSS consequently places customers and their increased expectations with regard to sustainability at the core of its activities. In doing so, the Company wants to drive customer satisfaction to ultimately become one of the top 100 global brands. Group Strategy

In order to ensure a long-term, sustainable development of the Company, HUGO BOSS pursues a holistic strategic approach that defines all key business processes and the actions of all operating units throughout the Group. The six fields of action, We, Environment, Employees, Partners, Products, and Society provide the framework for the Company’s sustainability program, “Today. Tomorrow. Always.” The Group’s sustainability activities are managed strategically by the central department Global Corporate Responsibility & Public Affairs, which reports directly to the Chief Operating Officer.

Strategic fields of action for sustainability

We Partners Employees Environment We actresponsibly. Products Society

We – “Creating Values Together”: With its various sustainability activities, HUGO BOSS is oriented towards the Sustainable Development Goals (SDGs) of the United Nations. In implementing and developing its sustainability strategy, HUGO BOSS relies on a regular dialog with its stakeholders and close collaboration with businesses as well as organizations. The aim is to jointly drive sustainability in the textile industry. The insights gained are also incorporated into the Company’s risk and opportunity management and help to enhance the Company’s own ethical standards as well as the HUGO BOSS Code of Conduct.

BY 2030

Climate-neutral

Environment – “Preserving Natural Resources”: The aim of environmental management at HUGO BOSS is to reduce the ecological impacts of its own business activities as far as possible. This commitment extends from the Company’s own administration and production sites to the supply chain and the global store network. By means of sustainable building concepts and technologies, electricity from renewable energy sources, and a continuous optimization of transport routes, the Company is working to reduce its CO2 emissions, thus making a direct contribution to protecting the environment. The Company’s ambitious sustainability targets include being climate-neutral in its own area of responsibility by 2030 and along the entire value chain by 2045. Combined Non-Financial Statement, Environmental Matters

Employees – “Fostering a Fair and Responsible Culture”: The basis for daily cooperation at HUGO BOSS is formed by the corporate values and the Code of Conduct, with the latter being the foundation for legally and ethically correct behavior in day-to-day business. The Company is convinced, that an inclusive corporate culture is an important source of creativity, strength, and innovation. With a clear goal in mind of actively contributing to an inclusive and fair world, the position of Head of Global Diversity & Inclusion at HUGO BOSS was created and filled for the first time in 2021. At the same time, the Company aims at further strengthening its position in international competition for the most qualified employees. In order to increase its attractiveness as an employer, the Company is focusing on a fair and transparent compensation scheme, a value-based corporate culture free from discrimination, opportunities for individual development, and a wide range of flexible working models to better combine work and private life. Employees and Teams, Combined Non-Financial Statement, Employee Matters

Partners – “Achieving Joint Responsibility”: Complying with social and environmental standards throughout its global supply chain is of fundamental importance for HUGO BOSS and its partners and is therefore an integral part of the contractual agreements. These standards are based on internationally recognized frameworks and include, among others, rules governing working hours, fair and safe working conditions, bans on child labor and forced labor, the payment of adequate wages, and freedom of association. HUGO BOSS attaches great importance to the careful selection of its partners, cooperation based on a spirit of mutual trust and the maintenance of long-term strategic relationships. Sourcing and Production, Combined Non-Financial Statement, Respect for Human Rights

80%

Circular products
by 2030

Products – “Ideas for Tomorrow”: HUGO BOSS sets high standards for the design and quality of its products. In the development of these products, which is increasingly being carried out digitally, the company puts more and more focus on innovative, sustainable materials and manufacturing techniques. At the same time, HUGO BOSS ensures compliance with strict standards on the safety and environmental compatibility of its products and their manufacture. The Company works closely together with its suppliers and other stakeholders on solutions for environmental and animal protection. Particularly sustainable products, called Responsible styles, form the spearhead of the Company’s sustainability activities. They are mainly made from more sustainable materials, which are certified according to clearly defined standards. The target of achieving a 30% share of Responsible styles by 2025 was already exceeded in 2021 (2021: 31%). Now, HUGO BOSS aims at increasing the proportion of Responsible styles to 60% by 2030. In order to conserve resources and ecosystems, HUGO BOSS has also set itself the goal of further extending the life cycle of its products, increasingly closing material cycles and driving the use of high-quality, recyclable materials. By 2030, HUGO BOSS aims to enable 80% of all products to become circular. In this context, in 2021, HUGO BOSS launched a collection with “Repurpose Styles”, in which existing materials were used for new, high-quality purposes. Research and Development

Society – “Promoting Perspectives”: The overarching aim of the HUGO BOSS corporate citizenship strategy is to unleash individual potential for success. It is based on three pillars: access to education, equal opportunities, and providing support in times of crisis. In implementing projects and activities along the value chain, the Company also takes account of regional needs at individual locations.

The Group strives for continuous improvement in all six fields of action and has set itself ambitious targets accordingly. Sustainability ratings serve as an objective indicator of the progress achieved. In 2021, HUGO BOSS was included in the Dow Jones Sustainability Index (DJSI) World for the fifth consecutive time. Among other things, the Company scored “best in class” in the categories of innovation management, risk and crisis management, tax strategy, and environmental and social reporting. As a result, HUGO BOSS was once again among the three best-rated companies in its industry worldwide that qualified for the index. In 2021, the Company was also included in the DJSI Europe for the second time in a row.

Early 2022, HUGO BOSS entered into a long-term strategic partnership with Swiss innovator HeiQ Plc. The HeiQ AeoniQ apparel technology enables the production of a sustainable, circular, and recyclable cellulose yarn. This is intended to enable HUGO BOSS to supplement or replace currently used polyester and nylon fibers with AeoniQ cellulose yarn, which during growth binds carbon from the atmosphere. In doing so, HUGO BOSS makes a vital contribution when it comes to preserving agricultural land, reducing water pollution, and decarbonizing the fashion industry. The partnership’s investment in HeiQ AeoniQ therefore perfectly fits in with HUGO BOSS’ ambitious sustainability efforts.

In 2021, HUGO BOSS also secured an ESG-linked syndicated loan for the first time. The loan is classified as sustainable finance and as such meets important ESG criteria. The interest rate will be adjusted annually based on the achievement of target values defined by HUGO BOSS across four ESG criteria. The first adjustment will be made in 2023 based on the 2022 target achievement. This takes into account the reduction of CO2 emissions, the proportion of women in management positions, fair working conditions at suppliers and the use of more sustainable cotton. This is the first financial instrument at HUGO BOSS to be linked to sustainability criteria. Financial Position, Capital Structure and Financing