Specialized Sustainable Innovation Policy

Monday, August 6, 2012

Specialized's mission is to be the best cycling brand in the world. And in today's world that considers more than just what we make, but how we make things and our impact on people and the environment throughout our operations. At Specialized we recognize that the decisions we make have social and environmental impacts. Our Sustainable Innovation Program is an ongoing effort to address our impacts in a meaningful and sustainable way. This includes:

-Internal accountability for our standards for social and environmental responsibility are being adhered to throughout our company, including our supply chain.
-Training and education on our Code of Conduct, with our employees and our supply-chain partners.
-Assessment of our supply chain to identify key areas of risk and opportunities for improvement.
-A commitment to drive positive, sustainable solutions for social responsibility in our industry by partnering with suppliers and other industry members.

Our values - PEOPLE, GLOBAL THINKING, RESPONSIBILITY and AUTHENTICITY - guide our sustainability efforts in the way we operate as a company. We aim for an integrated, sustainable manufacturing program where these values influence our decision-making.

We are committed to upholding our Code of Conduct throughout our supply chain. This Code guides the practices we expect from our suppliers.

Specialized Code of Conduct
Informed by the Outdoor Industry Association Code of Conduct, the Fair Labor Association, ILO conventions and adjusted to highlight prohibiting slavery and human trafficking.

Compliance with Laws and Workplace Regulations
Employers will comply with laws and regulations in all locations where they conduct business.

Employment Relationship
Employers shall adopt and adhere to rules and conditions of employment that respect workers and, at a minimum, safeguard their rights under national and international labor and social security laws and regulations.

Nondiscrimination
No person shall be subject to any discrimination in employment, including hiring, compensation, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, social group or ethnic origin.

Harassment or Abuse
Every employee shall be treated with respect and dignity. No employee shall be subject to any physical, sexual, psychological or verbal harassment or abuse.

Forced Labor
There shall be no use of forced labor, including prison labor, indentured labor, bonded labor, human trafficking, slavery or other forms of forced labor.

Child Labor
No person shall be employed under the age of 15 or under the age for completion of compulsory education, whichever is higher.

Freedom of Association and Collective Bargaining
Employers will recognize and respect the right of employees to exercise their lawful rights of free association and collective bargaining. Where the right to freedom of association is restricted under law, vendors must allow their employees to raise with the vendors' representatives any job-related grievances the employees may have, without penalty or reprisal.

Health, Safety and Environment
Employers shall provide a safe and healthy workplace setting that seeks to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employers' facilities.

Hours of Work
Except in extraordinary business circumstances, employees shall (i) not be required to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by the law of the country of manufacture or, where the laws of such country do not limit the hours of work, the regular work week in such country plus 12 hours overtime and (ii) be entitled to at least one day off in every seven day period.

Compensation and Benefits
Employers recognize that wages are essential to meeting employees' basic needs. Employees shall be paid, as a floor, at least the minimum wage required by local law or the prevailing industry wage, whichever is higher, and shall provide legally mandated benefits. In addition to their compensation for regular hours of work, employees shall be compensated for overtime hours at such premium rate as is legally required in the country of manufacture or, in those countries where such laws do not exist, at a rate at least equal to their regular hourly compensation rate.

Environment
Employers recognize that environmental responsibility is integral to producing world-class products. In manufacturing operations, adverse effects on the environment and natural resources are to be minimized while safeguarding the health and safety of the public. Employers will comply with environmental rules, regulations and standards applicable to their operations, and will observe environmentally conscious practices in all locations where they operate.

Specialized's 2012 Sustainable Innovation program

The following framework guides the action plan for Specialized as a company for 2012 to develop a robust and integrated sustainability program.

Company development
We begin by training and educating our employees to understand the impact of our decisions on the supply chain. Additionally, we will identify areas where our actions can help to improve the lives of workers through that supply chain.
This means adopting policies for sourcing, allocating business and accountability, including: avoiding areas of known risk for issues like human trafficking and slavery, as well as sourcing from suppliers who demonstrate best practices for social and environmental responsibility.

Supply Chain development
Training, education and accountability extends to our suppliers as well. Suppliers are brought up to speed on our standards and encouraged to adopt their own social responsibility program. This includes signing a contract with Specialized to uphold human and labor rights in their operations and supply chains as well as being available for announced and unannounced monitoring of their businesses to these requirements.

Map and risk assessment
In addition to building internal capacity at the company, Specialized will conduct a mapping and risk assessment exercise of our supply chain. This will identify which areas of our supply chain hold the highest risk for human and labor rights violations. This also provides us an opportunity to identify the key areas where we can make changes for improvement and focus our efforts.

Monitoring of suppliers
The results of this exercise will direct our monitoring efforts - here we will work with key suppliers to identify working conditions, management systems and risks on the ground. By focusing our efforts and using our leverage, we can be a force for positive change. This is our priority.