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Communication on Progress 2012Corporate Social Responsibility Report

Communication on ProgressCorporate Social Responsibility Report

The United Nations Global Compact (UNGC) is the world’s largest voluntary corporate citizenship initiative.

The UNGC issues Ten Principles on Human Rights, Labour Standards, the Environment and Corruption. Membership of the UNGC requires companies to issue a ‘Communication on Progress’ report annually.

This report is our SEvENTH COP and it outlines Shop Direct Group’s activities in support of these Ten Principles

HUMAN RIGHTSPrinciple 1businesses should support and respect the protection of internationally-proclaimed human rights; and

Principle 2make sure that they are not complicit in human rights abuses.

lAboURPrinciple 3businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4the elimination of all forms of forced and compulsory labour;

Principle 5the effective abolition of child labour;

Principle 6the elimination of discrimination in respect of employment and occupation.

eNvIRoNMeNTPrinciple 7businesses should support a precautionary approach to environmental challenges;

Principle 8undertake initiatives to promote greater environmental responsibility; and

Principle 9encourage the development and diffusion of environmentally-friendly technologies.

ANTI-CoRRUPTIoNPrinciple 10businesses should work against all forms of corruption, including extortion and bribery.

1THe UNITed NATIoNS GlobAl CoMPACT TeN PRINCIPleS

Cover image: Garston Adventure Playground - supported by the Shop Direct Foundation.

4CEO forward and support for The Global Compact PAGE03

5The CR Board PAGE05

6Labour Principles PAGE06

7Human Resources PAGE08

8Environment/ Energy Consumption/ Recycling/ Transport/ Health & Safety PAGE10

9Corruption, Governance & Transparency PAGE14

10Our Community PAGE15

11Promoting Positive Body Image and Design Ethics PAGE16

12Responsible Lending PAGE17

13How did we do? PAGE19

14Stakeholder Engagement PAGE20

INdICAToRSANd GRAdINGSYSTeM

At the end of this report you will find a marking scheme. The purpose of this scheme is for us to rate how well we believe we are performing in each reporting area, ranging from legal compliance to best practice.Where we have not marked ourselves as world class or good, we intend to raise standards accordingly. In deciding on indicators for this COP once again we have chosen our own system. Nevertheless, this was done after using as reference the Ethos Indicators and GRI methodology.We will continue to monitor best practice in the CR and sustainability reporting industry and adapt our own indicators and reporting accordingly.

ASSuRAnCEAfter this report is published it will be volunteered for peer-review by a randomly-selected group of corporate members and observers of the UK Network of the UN Global Compact.

Any suggested changes will be made and the report will be re-submitted (if needed) to the UNGC following the Peer-Review Process.Prior to publishing, there was also assessment by a wide variety of stakeholders including Shop Direct Group colleagues, customers, suppliers and NGOs and in this regard, a variety of stakeholder comments appear at the end of the report.* This Communication on Progress predominantly refers to activities and progress during 2012.

CoNTeNTS

Page02Communication on ProgressCorporate Social Responsibility Report

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As we continue on our journey to becoming a world-class digital retailer, CSR will remain at the heart of our business.

We support the United Nations Global Compact and strive to abide by the Ten Principles in all our business operations.

Alex BaldockGroup Chief Executive


4 FoRewoRd

OuR PuRPOSE:


FUTUReFoCUS 10

HIGHlIGHTS

Energy use & recycling

Digital inclusion & online safety

Publication paper & direct mail

Transport

Community

Responsible lending

Corruption, governance & transparency

Health & safety

HR, diversity & equal opportunities

Ethical sourcing, product, labour, human rights and animal welfare

THe INFlUeNCe oF THe GlobAl CoMPACT oN oUR bUSINeSS

RESPECT fOR THE GLOBAL COmPACT PRInCIPLES BInDS TOGETHER OuR ACTIvITIES In CR AnD SuSTAInABILITy AnD GIvES uS A SImPLE TO uSE AnD SImPLE TO unDERSTAnD fRAmEwORk fOR ACTIOn AnD mEASuREmEnT.

Reporting on the Ten Principles ensures we report comprehensively across all our business impacts.The writing of a COP increases our competitiveness as it serves as a public and very visible record of progress and therefore focuses our actions and planning in multiple business critical areas. This aids employee understanding of our business and by mapping our impacts has helped identify cost savings and opportunities to increase efficiencies.We also believe that the adoption and respect of the Ten Principles gives us a renewed licence to operate among the communities within which we work, as well as with our customers, colleagues, suppliers and wider stakeholders.

OuR CuSTOmERS: • All own brand goods ethically and environmentally

manufactured

• Over 340 audits and revisits carried out at factories

• No goods sourced from countries where there are UN trade sanctions or embargoes

OuR COLLEAGuES: • A bespoke pensions auto-enrolement website

created give colleagues a personalised on-line experience to help them understand their pension and benefit package

• Launch of an employee community volunteering programme

• Maintained BSI OHSAS 18001 Health and Safety accreditation.

OuR COmmunITy: • Expansion of the Shop Direct Group Charitable

Foundation to cover the North West of England

• Over £120,000 raised at our Charity Ball

• Continuing partnership with Alder Hey Children’s Hospital and Parklands High School.

OuR PLAnET: • Reduction in electricity consumption by 4.9%

• We have reduced our waste-to-landfill to less than 0.1% for 2012

• Introduction of a range of new larger capacity, aerodynamic vehicles in partnerships with one of our main logistics partners.

createD in 2008, tHe cr BoarD overSeeS tHe arena oF corPorate reSPonSiBility anD SuStainaBility. tHe cr BoarD iS maDe uP oF eigHt executive memBerS anD meetS quarterly.

5 THe CR boARdPage05Communication on Progress

Corporate Social Responsibility Report

Jacqui Humphries Group People Director

Michael Spenley Head of CSR & Compliance Direct

Tony Jowett Managing Director SDGS

Rob Hardman Head of International & New Business

Peter Johnson Head of Internal Audit

John Pears Credit Risk & Operations Director

Daniel Rogers Head of Group Property & Facilities

James Evans Group Communications Director

6lAboUR PRINCIPleS


This included the introduction of new ways of working including the use of accredited third party audit companies for factory audits alongside our own Compliance Direct team.

HumAn RIGHTSWe did not source from countries with UK, EU or UN mandated trade sanctions or embargoes. We continued to run a comprehensive global program of ethical and environmental factory audits to ensure there were no abuses of human rights.

fORCED LABOuRWe take all forms of forced labour extremely seriously and work hard to make sure we are not involved in the exploitation of workers at factories that make our products in any geographical location including the UK and EU countries. The SDG monitoring programme found two cases of forced labour in 2012. Both cases related to the same supplier in India which was forcing overtime on workers at two factories by the use of fines. Following our audit, the supplier stopped this mal-practice. These issues and remediation occurred prior to a review of our policies in April 2012 which would have led to the supplier’s immediate disengagement.

The Shop Direct Group Ethical and Environmental Code of Conduct, which is signed by all of our suppliers, states the following:

“We will not tolerate forced labour, bonded labour or labour which involves physical or mental abuse. This means that suppliers must not use or threaten workers with any physical punishment, verbal or sexual harassment or dominate or restrain workers by force, authority or threats. Workers must not be required to lodge “deposits” or their identity papers with their employer and they must be free to leave their employer after reasonable notice.”

CHILD LABOuROur Code of Conduct, which is signed by all of our suppliers, clearly outlines our position on child labour in the strongest terms:

“Exploitation of child labour is totally unacceptable under any circumstances. Suppliers must not employ any person under the minimum legal working age applicable to their country and under no circumstances must they employ anybody under the age of 14 years.”

The SDG monitoring programme found two confirmed cases of child labour at factories in China and Thailand during 2012. This was deeply regrettable. In each case we did our best to work with the supplier to ensure the rights of the child and their income was protected, in line with best practice.

michael SpenleyHead of CSR & Compliance Direct

wE HAvE BuILT uPOn OuR COmmITmEnT TO unGC PRInCIPLES 2, 4 & 5 THROuGHOuT 2012.

6lAboUR PRINCIPleS


* It is worth noting that the figure highlighted in the table above is 105 below the projection stated in last year’s COP for 2012 factory ethical and environmental audit. This deficit is due to strategic a series of reviews and team rationalisation. The 2013 audit numbers will rebound to 400 given that we now have a combined in-house and third party approach.

mOnITORInGIn April 2012 the Group Executive Board introduced the following KPIs:• All factories that wish to manufacture

own label product for Shop Direct Group must be assessed by our in-house audit providers Compliance Direct HK Ltd or our appointed Independent Third Party Audit Companies prior to appointment

• Every existing own label supplier will be audited every two years

• Under no circumstances will we work with factories that fail our audit for Child Labour, Forced Labour or Dangerous Working Conditions. We will cease to work with factories that are found to be non-compliant immediately

• We will work with factories on required improvements to any other aspect of non-compliance to the Shop Direct Ethical & Environmental Code of Conduct. These factories will be re-audited within 12-months from the original audit and must demonstrate full improvement or they will cease to be suppliers.

This new approach resulted in an overall compliance score of 98% after eight-months. However, it is worth noting that the robust nature of our remediation plan means that this score may be adjusted after a full 12-months has elapsed and then on a rolling basis. SDG factory audits were completed in Albania, Bangladesh, Cambodia, China, India, Indonesia, Macedonia, Malaysia, Romania, Thailand, Turkey and vietnam.In 2012, the Compliance Direct Team worked on due diligence audit and strict remediation plans for all own-label product sourced by our offices in the UK, India, Bangladesh, China and Thailand.

ETHICAL PRODuCT POLICIESSDG has strict policies on timber sourcing, diamond sourcing and design ethics. The last 12-months have seen a period of change and development for Shop Direct Group’s activities in support of the UNGC Labour Principles. This has included a re-framing of objectives by the Group Exec Board that are now very clearly defined. In 2013 we will build on these foundations and move further towards industry best practice.

AnimAl welFare we have a strict no fur policy and rigid guidelines on the use of skins based on industry best practice.

Audits And Revisits (Projected)

2008 2009 2010 2011 2012 2013

300 400 500 440 345* 400

7 HUMAN ReSoURCeS


It continues to be a tough economic climate for the retail sector. Our challenge as a business has been to ensure we are able to adapt, not only to the current market conditions but to secure the success and profitability of the business in the future by meeting changing customer needs. More customers are choosing to shop online and through mobile devices. Rapid changes in consumer behaviour mean we have to think differently about how we work, what processes we have in place and how we engage with our customers. As a result, we made some internal changes.

SuPPORTInG THROuGH CHAnGEWe undertook some re-structuring activity at our Head Office in Speke with a view to investing in our area of growth, E-Commerce. As a result, we created new roles across our digital and mobile teams. This investment will not only enable us to deliver our online and digital strategy but will also deliver improved efficiencies.We transferred our Customer Contact Centres and some of our Financial Services Operations to service provider, SERCO. In partnership with SERCO, we ensured the smooth transition of colleagues. We'll work together to leverage technology and deliver a customer service in line with our customers’ needs. We are introducing webchat along

with new systems that will better track and record the customer experience, encouraging continuous improvement in the service we offer.

InvESTInG In LEADERSHIPAlongside these internal changes, we invested in our leadership and management capability. We continued to embed leadership and management skills through our leadership development programme, DICE. The programme has now been delivered to all first line managers.Within our Financial Services business, we delivered a training and competence programme to make sure that FS colleagues met all regulatory and compliance requirements within their day to day activity.As our customers continue to move online, we must also create innovative ways of communicating with our colleagues in a digital way to reflect this move. We introduced an online training calendar enabling colleagues to create a bespoke learning programme from a blend of E-Learning and workshop learning as well as development solutions.‘My Pension Online’ went live in September 2012. This online tool gives colleagues a personalised online experience to help them understand their pension and benefit package as well as allowing them the opportunity to effectively plan for retirement

and flex contributions as required. This is an ideal platform to build on the legislative requirements of pension auto-enrolment which will come into force in 2013.

COmmITTED TO EnGAGEmEnTWe are committed to being a best in class place to work and employee engagement is high on our agenda. We continued our digital HR journey by taking our employee engagement survey online. Using both desktop and mobile devices, our colleagues told us what’s it’s like to work for Shop Direct. Despite the level of change within the organisation, our engagement score improved year-on-year and was in line with the retail benchmark. Following the survey, our People Forum members facilitated 80 listening groups and have used this feedback to create meaningful action plans to drive engagement across the Group. We’re proud of what we’ve achieved this year and 2013 promises to be equally as challenging. We will devise a robust three year plan that will ensure we deliver on our digital strategy and will re-launch our organisational purpose and values. This will require continued investment and innovation in our talent management processes, our leadership capability, training & development as well as how we engage and communicate with colleagues.

Jacqui Humphries Group People Director

AGE CATEGORY BUSINESS AREA

• WHITE - 72.6%

• NOT DECLARED - 13.7%

• MIXED - 0.3%

• CHINESE OR OTHER - 0.9%

• BRITISH - 1.4%

• BLACK OR BLACK BRITISH - 2.2%

• ASIAN OR ASIAN BRITISH - 8.9%Under 21

21-3030-40

40-5050+

0

300

600

900

1200

1500

0

200

400

600

800

1000

69

870922 950976

Contact Centres

2.1%

33.1%

36.7%

ETHNIC ORIGIN

Littlewoods Clearance

Head Office & Group

Warehouse & Returns

GENDER

42.7% Male

Female57.3%

21.1%

7%Financial Services

Dat

a as

at 3

1/12

/201

2

PoPUlATIoN SeGMeNTS


“AS OuR BuSInESS TRAnSfORmATIOn COnTInuES AnD wE ADAPT TO THE SHIfT In HOw OuR CuSTOmERS wISH TO SHOP wITH uS, wE HAvE PuT In PLACE A numBER Of CHAnGES, SOmE Of wHICH HAvE HAD An ImPACT On OuR EmPLOyEE HEADCOunT. wE COnTInuE TO wORk wITH OuR PEOPLE AnD OuR TRADE unIOn PARTnERS TO mAnAGE THESE CHAnGES.”

2011 201220102009200820072006

kWh

-9.8% -11.7% -13.7% -4.2% -7.5% -4.9%

Electricity reduction vs Prevous Year%

2011 201220102009200820072006

kWh -26.0% -4.7% -9.5% -1.3% -33.9% +8.3%

Gas reduction vs Prevous Year%

2011 20122010

15,375

11,187 7,610

Water consumption at Head Office (m3)

2011 201220102009200820072006

kWh

-9.8% -11.7% -13.7% -4.2% -7.5% -4.9%


2011 201220102009200820072006

kWh -26.0% -4.7% -9.5% -1.3% -33.9% +8.3%


2011 20122010

15,375

11,187 7,610


2011 201220102009200820072006

kWh

-9.8% -11.7% -13.7% -4.2% -7.5% -4.9%


2011 201220102009200820072006

kWh -26.0% -4.7% -9.5% -1.3% -33.9% +8.3%


2011 20122010

15,375

11,187 7,610


we continue to focus on the four key areas that impact our environment:• Energy and Water Consumption• Health, Wellbeing & Safety• Business Travel and its impact on

the environment• Recycling

we have made good progress towards our goal of environmental ‘best practice’. It is pleasing that despite tough economic conditions, reducing environmental impact continues to be a strong area of focus for our business. It is, quite simply, part of ‘how we do business’ at Shop Direct.

8

Daniel RogersHead of Group Property & Facilities

eNvIRoNMeNT & ReCYClING


Electricity consumption has fallen by

4.9% almost

1.8m kwh

RECyCLInGShop Direct Group has increased recycling each year and, although there is still work to do in some areas of the business, our overall numbers are shown below.

In2013wehopetoeliminatewastetolandfillcompletely.

Percentage Recycled at SDG sites

59.6%

78.2%

80.0%

81.7%

83.2%

Percentage points difference vs. previous year (recycled on site)

5.9

18.6

7.8

2.1

1.5

Total Percentage Recycled (at SDG sites + external materials recycling facility)

59.6%

78.2%

96.8%

97.9%

99.9%

yEAR

2008

2009

2010

2011

2012ELECTRICITy uSAGEDuring 2012, we achieved a reduction of almost 1.8million kWh of electricity versus the previous year, which equates to 4.9% reduction.

GAS uSAGEIn 2012 our gas consumption increased by 8.3%. This was due to the extremely harsh and prolonged winter conditions that occurred during the year. Despite the increase, investment in our building management system controls has contributed to more effective use of gas. Having real time information and introducing software driven decision making has optimised consumption as well as the added benefit of prolonging the life expectancy of our systems. wATER COnSumPTIOn

We have made further efforts to reduce water consumption over the past 12 months, in particular at our Head Office which accounts for a significant part of our group consumption.Other sites have also introduced water saving measures and we intend to report our progress at group level by providing our annual consumption statistics in 2013.

28% decrease in our reportable-type accidents.

non reportable accidents are also down 36% from previous year.

TRAvEL TO wORk ACTIvITIESWe continue to promote public transport via regular marketing activity. We operate a free-to-hire pool bicycles and encourage car-sharing. We have plans in 2013 to increase the number of car share bays that are available and will be launching a route mapping website for colleagues to match up with potential car share partners.

In 2013 we will work with Merseyside local passenger authority Travelwise to pilot the ‘Walrus Card’ – similar to London’s Oyster card, as well as piloting ‘real time’ bus information within our building.

HeAlTH, SAFeTY & wellNeSS


In future, we will be benchmarked by the institute with a view to gaining subsequent accreditation for our warehousing sites as we look to have a unified approach to Health & Safety across the group.

We are pleased to report a 28% decrease in our reportable-type accidents. Non reportable accidents are also down 36% from previous year however for part of the year direct employee numbers were lower due to the transfer of our Customer Contact Centres to our new partner Serco.

Wellness continued to be an important focus for us during 2012. We delivered a programme of activities and events to promote colleague wellbeing including: smoking cessation, a ‘Healthwise’ menu, weight management and healthy eating tips, free eye-tests, flu vaccination, sun safety, reduced dental fees, discounted gym memberships, zumba classes, running clubs, walking clubs and golf events.

we are fully accredited by the British Standards Institute OHSAS 18001 (Occupational Health and Safety management System) in all our financial Services Contact Centre sites andHeadOfficesites.

bUSINeSS TRAvel

STA

TIS

TIC

S F

OR

201

2

RAILYEAR

2008

2009

2010

2011

2012

CO2/kg

53,000

77,000

129,000

110,000

88,000

Mileage

621,000

837,000

70,000

1,212,000

958,000


Rail travel by our colleagues within the uk has reduced by 21% in 2012, whereas air travel has increased by 17%. The increase in air travel can be attributed to a number of developments including an outsourcing arrangement Shop Direct have entered into with a new customer contact partner ‘Serco’ who have some sites based overseas, including South Africa.

Road travel has reduced again for the fifth year in succession and our focus for 2013 is to continue encouraging colleagues to choose carefully whether they need to travel as well as promoting the use of virtual meeting technology such as web, video or voice conferencing.

In addition, we have now contracted to a new range of company vehicle options, providing a choice of volkswagen Blue Motion models, one of which emits just 99g/C02 per km. We estimate this will reduce C02 emissions from company vehicles by at least 15% by the end of 2013.

We have continued to work with our logistics partners to influence and reduce where possible, the C02 that is emitted as part of end to end logistics operations. The logistics team has directed the introduction of a range of new larger capacity, aerodynamic vehicles in partnership with one of our main logistics partners.

Each trailer takes nearly twice as much product as the old single-deckers so we are able to almost cut the number of trips in half.

Business mileageYEAR

2008

2009

2010

2011

2012

TOTAL

2,081,000

2,068,000

1,474,000

1,193,000

1,094,000

Tons of CO2 emitted

862

857

610

494

453

Assuming large car at 414.2 kg of C02 per 1000 miles. Source www.Transportdirect.info

Cutting carbon emissions from transportation of our product. with new trailers carrying twice the load, saving 300,000 litres of diesel per year and 800 tonnes of CO2.

Air TravelYEAR

2008

2009

2010

2011

2012

CO2/kg

1,701,000

952,000

1,290,000

967,000

929,000

Mileage

4,922,000

4,814,000

5,587,000

3,832,000

4,489,000

* Flight CO2 based on DEFRA calculations.

volume of Catalogues

14,246,000

12,246,000

11,960,000

5,669,000

Forecast 2,842,000

yEAR

2009

2010

2011

2012

2013

PAPeR SoURCING

PrinciPle 8


Half of the timber harvested world-wide is used to make paper. Paper products are highly visible to customers as they impact on their everyday life, from magazines through to direct mail and as well as product packaging. We must operate responsibly to ensure the paper we buy comes from legal and sustainable sources.As part of our on-going support to sustainable sourcing, we continue to print on paper certified Promoting Sustainable Forest Management (PEFC) for customer catalogues, hand books and

magazines. It is essential that we continue to illustrate our PEFC certification with over 80% of the paper consumed by the Group for catalogues and magazines.

In 2013 and beyond our focus will remain on supplier audits of the ISO 14001 environmental accreditation.

80% of the paper consumed by the Group for catalogues and magazines is PEFCcertified.

DIGITAL fOCuSAs the Group continues its transformation towards a digital department store the volume and size of catalogues will continue to decline. The latest view for 2013 shows the number of catalogues sent to customers will decrease by 50% versus 2012. The downward trend will continue with a further reduction of 20% in volumes in 2014. The catalogue pages will reduce by a further 10%, focusing on driving customers to the retail websites to browse and shop.

We will continue to carefully manage customer communications that use paper and create new digital opportunities for communication including social media. We have accelerated the development of digital personalised content to be more relevant for customers. By the end of 2012 Shop Direct achieved a 20% adoption rate of account holders opting for an online statement rather than the monthly paper statements. We have set ourselves an ambitious target of achieving a 50% adoption rate by 2015.

As the world's largest forest certification system, PEFC remains the certification system of choice for small, non-industrial private forests, with hundreds of thousands of family forest owners certified to comply with our internationally recognised Sustainability Benchmark.

CoRRUPTIoN, GoveRNANCe & TRANSPAReNCY9


Shop Direct has maintained its zero tolerance approach to corruption and has built on the strong foundations established in previous years. Those foundations continue to be:

• our consistent Group policies

• a regular risk assessment process

• colleague training and awareness

• transparent supplier engagement

• industry networking

• robust whistle-blowing and investigation procedures

In addition to sustaining these key pillars of our anti-corruption approach we have progressed our policies and processes in the following areas:

• anti-bribery and corruption training has been updated and annual refresher training has been scheduled

• we wrote to all suppliers reinforcing our zero tolerance approach to bribery and corruption and re-communicating our code of conduct

• our Gifts and Hospitality policy has been re-communicated to all relevant colleagues

• the Group’s Corporate Responsibility Board monitors a broad cross section of financial and operational management information to highlight any unusual transactions or trends

• the bribery & corruption risk assessment is used as a key input into the internal audit planning process and specific fraud risks are considered in every audit.

These developments improved the level of awareness and oversight across the Group of bribery and corruption risks.

AUDITPRInCIPLE 10

Working against corruption in all its forms, including extortion and bribery

lookING FoRwARd the Group’s focus is on building on the solid foundations established to underpin employee awareness of bribery and corruption by reinforcing the detective components of our anti-bribery and corruption approach. This will be achieved through the embedding of annual refresher training and ensuring all colleagues have completed the training. In addition, we will evolve the use of financial and operational management information to highlight unusual transactions or trends for investigation.

Peter Johnson Head of Internal Audit

We are proud of our sustainable community investment programme and see it as a key component of our commitment to being a good corporate citizen.

SHOP DIRECT fOunDATIOn2012 saw the expansion of the SDG Charitable Foundation to cover the entire North West of England. The Foundation supports children and families by aiming to create safe and inspiring environments that impact positively on local social need. Administered by local charity, Community Foundation for Merseyside, The Foundation distributes grants of between £2000-£10,000 to small grass-roots charities in 2012. We distributed £55,000 to 13 charities including Wirral based Stick and Step who provide specialist conductive education and support services to children with cerebral palsy. Liverpool based Yellow House who work with young people from socially excluded backgrounds to develop their skills and take an active role in their society, also benefited from funds.As well as a cash donation, the SDG Foundation builds capacity within the charities as a way of increasing their sustainability. An example of our approach is our work with North City Play, a play-scheme for children with severe disabilities and their siblings. As well as donating £5,000 we have worked with their management team to identify other funding streams, deliver staff training and coaching and offer legal advice. SDG colleagues have also completed two makeover challenges, completely decorating and refurbishing four rooms and their garden.Our Foundation is linked to local social need and we use in-depth needs analysis

to influence where our money will be spent, ensuring maximum benefit and impact for the community - we listen to what communities say is most needed.

RAISInG funDS & AwAREnESSThe second SDG charity ball was held at the BT Convention Centre, Liverpool. More than 1,000 guests attended and over £120k was raised. The money was divided between five charities: the Retail Trust, Zoe’s Place, the Fashion and Textile Children’s Trust, Action for Children and Alder Hey Children’s Hospital.Our colleagues raise a great deal of money for the good causes that matter to them. The money that they raise is supplemented by Helping Hand, our matched funding programme, with the combined contribution to charity being over £500,000. Our family brand, Littlewoods turned 80 during the year and the celebrations coincided with the report on the Hillsborough disaster. We were overwhelmed by the dignity and dedication shown by the families and wanted to do something to leave a positive legacy. With the full support of Hillsborough Family Support Group we donated £25,000 in memory of the victims. £15,000 was shared between the city’s two football clubs to support their community work and enable local young people to develop skills, improve their confidence and increase self-esteem. The remaining £10,000 was used to fund small charities with grants of up to £1,000 for inclusive grass-roots sports activities

across Liverpool.Christmas was once again marked with a donation of a games console and the latest gaming equipment to every ward at Alder Hey. In addition, we donated £8000 of toys and games to Cash 4 Kids, Great Ormond Street Children’s Hospital and four charities who work with disadvantaged children.We are founder members of the Merseyside 100 giving circle, a group of philanthropic individuals and companies who encourage giving and support charities that reach out some of the more hard to reach individuals.

OuR COLLEAGuES In THE COmmunITyDuring 2012, we launched a community volunteering programme that allows our senior management team to lend their strategic insight, skills and expertise to local charities. Our people will be working with four chosen charities to develop strategic plans and act as 'trouble-shooters' to solve issues and challenges, engage key stakeholders and deliver greater sustainability for the charities.We are committed to continuing to work with our local school, Parklands High School and will be supporting them as they move through the process of becoming an academy.2013 will see the launch of our first ever colleague CSR awards which will seek to reward staff for the work that they do in the community.


CoMMUNITY

James Evans Group Communications Director

10

Image: Stick 'n' Step

Imag

e:

Stic

k 'n

' Ste

p


11

As a leading uk retailer with one of the largest photo studios in Europe, Shop Direct Group is committed to promoting both fair ethnicity and body image. Our brand portfolio gives us mass market appeal in the uk population, so we understand our responsibility to present a positive body image to all ages, genders and ethnicities.

PRoMoTING A PoSITIve bodY IMAGe Presenting a

positive body image for consumers has now been embedded across the Shop Direct Group

We have set clear standards on both body image and ethnic diversity across all of our clothing ranges and we collaborate with the UK’s leading model agencies to make sure that the models we use always portray a healthy body image and represent the wide spectrum of age ranges, sizes and ethnic diversities of society today.SDG has undertaken an exercise to define clear guidelines, establish consistent working practices and effectively communicate these requirements to all parties involved throughout the process – the result is that 99% of the

models we use comply with the high standards we have set ourselves. We have refined our methods of model casting, booking and photographic processes to ensure there are clear check points for quality control of all models booked by SDG.Presenting a positive body image for our customers has now been fully embedded across the business and we remain focused on its delivery within all areas of the Group, from the product we design, to the images we create.


12

fAIR AnD TRAnSPAREnT fInAnCIAL SERvICESAll credit facilities are provided in line with the Consumer Credit Directive 2010 and SDGFS complies with OFT guidance and Industry Codes and Practices, such as the FLA Lending Code. Shop Direct takes a very proactive approach to assessing the financial well-being of its customers, not just upon application of credit but we continue to monitor our customers every month, both in terms of internal account performance data and external bureau data. This information is used in every credit decision.

Nearly all of the credit decisions are assessed through highly predictive automated scoring. This provides consistency and robustness of decision making. The continued real term decline of disposable incomes across the UK, coupled with benefit pressures and weak employment, continue to present challenges for our customers. SDGFS takes responsible lending very seriously and has responded to the macroeconomic environment through tightened lending policies in 2011. Through 2013/14 we will continue to test and develop additional tools to help us further understand and monitor our customers’ affordability.

COmBATInG fRAuD SDGFS uses a wide range of controls and tools to protect both our customers and ourselves from fraud. During 2012 we have seen across the credit industry the continued pressure of identity theft and customers’ accounts being taken over.We have continued to invest in measures to prevent and detect such criminal activity and lessen the effects this can have upon our customers and wider society. In addition to the fraud protection measures we have taken internally, we also continue to educate our customers on any fraud threats, such as phishing scams on the internet and the need to protect their personal data. For customers who have

experienced fraud, we ensure through our dedicated Identity Theft Team, that they are given the right advice and support.We work actively with the Police to gain successful convictions of criminals perpetrating fraud.

John PearsCredit Risk & Operations Director

we only accept around 30% of credit applications.

we decline approximately 12% of existing customers’ order requests for extending further retail credit.

ReSPoNSIbleleNdING ANd CRedIT SeRvICeS

key to our offering is ensuring that whilst we make the good products available to our customers, we do so in a responsible way.

The Shop Direct Group financial Services is the sole provider of credit facilities to support the retail offering of Shop Direct Group. This enables customers to financetheirpurchasesusingamixofeasytounderstandrevolvingandfixedsumcredit facilities. In addition, SDGfS partners with other responsible lenders to offer personal loan and credit card facilities to customers of the Group.


SPECIALIST SuPPORT TEAm CASE STuDy:Alicia Stewart

“ The training I have received from the Samaritans has equipped me with the skills and confidence to deal with these difficult conversations so that I can listen to my customers’ problems whilst remaining both calm and objective.

”

As a member of the Specialist Support Team (SST) for Shop Direct my main duties are to discuss account arrears with potentially vulnerable customers who may be having difficulties managing their account. With the customer I discuss their personal circumstances to understand how it is affecting their ability to deal with the Shop Direct account and other finances. As a member of the SST, many of my customers I interact with suffer with some form of mental illness and can become distressed when discussing these difficult topics. However, it is important to encourage this conversation to gather as much information and understanding as possible so that this will enable me to work with the customer in finding a solution. The training I have received from the Samaritans has equipped me with the skills and confidence to deal with these difficult conversations so that I can listen to my customers’ problems whilst remaining both calm and objective.

For me, it is comforting to know that if I deal with a customer who is particularly distressed then I can prevent emotional energy levels increasing and sensitively discuss the Samaritans where appropriate. I can signpost the customer to the Samaritans or, with the customer’s permission, arrange for someone from the Samaritans to call the customer back. Recently, a customer was passed through to the SST from the Arrears Collections Department as she was very distressed on the telephone due to a family bereavement. It soon became apparent that the customer was unable to discuss her finances and needed emotional support. We discussed the Samaritans and with her permission I arranged for the Samaritans to call the customer back. A few days later I made a call to the customer and established that she had set up a meeting to visit her local Samaritans. The customer was feeling much better and is confident in the knowledge that support is only a phone call away. Following this, I

was able to discuss the customer’s account arrears and set up a payment plan. This was a positive outcome for the customer where she was able to get emotional support and it gave the customer the strength to deal with their account to prevent a manageable debt becoming unmanageable. When the customer call has closed, it is important that we talk about how the emotionally distressing call made me feel with my team manager or colleagues rather than taking these feelings home. Being a member of the SST is both challenging and rewarding and I really feel I am making a difference.

In order to meet the needs of our customers who find themselves in a vulnerable position, SDGFS has expanded the Specialist Support Team, to ensure that any issues they have are dealt with quickly and sympathetically. The team works closely with UK's leading debt and support charities, such as Step Change and The Samaritans. The difference this work makes to our customers in need is clearly reflected in the feedback they receive from those they have helped.

THIS wORk HAS BEEn RECOGnISED THROuGH A nATIOnAL CREDIT TODAy AwARD In 2012.

ReSPoNSIbleleNdING ANd CRedIT SeRvICeS


6 Labour Principles7 Human Resources8 Environment/ Energy Consumption/ Recycling/ Transport/ Health & Safety9 Corruption, Governance & Transparency10 Our Community11 Presenting Positive Body Image and Design Ethics12 Responsible Lending

Legal Compliance

Achieved Results

WorldClass

13 How dId we do?UN GlobAl CoMPACTPeRFoRMANCe INdICAToR STATISTICS fOR 2013

Communication on ProgressCorporate Social Responsibility Report STAkeHoldeR

eNGAGeMeNT

“ I raised £185 for a small, local charity which is particularly close to my heart and after applying for Helping Hand, I was lucky enough to receive an exact pound for pound match from the company. This money will make a great deal of difference and allow the charity to continue with the life-changing work they do.

”“ Shop Direct is committed to

CSR with a team of expert staff developing and finessing their work and policy to ultimately support their customers and the communities in which they do business.

”“ The ethical sourcing of product is key.

”

“ Shop Direct has established the Shop Direct Foundation, to ensure a strategic approach to supporting local children, young people and families in Merseyside in the most effective way. Moving forward, Shop Direct Group needs to embed their work across the Group and engage staff at all levels in the act of philanthropy whether it is the giving by the company or staff of time, expertise or money, in order to take their CSR to next level; the encouragement of mentoring voluntary sector leaders via their Leadership programme as well as the Shop Direct Foundation are evidence of this truly developing.

”

“ Their bi-annual gala ball, now staged twice, has proven their ability to raise the profile of their charitable work and CSR aims with a broad audience, raising thousands for grass-roots projects to improve lives.

”“ I feel the Company is consistently

looking to improve its image in the corporate and social environment. We are embracing the Cycle to Work scheme, alternative transport methods and even replacing car park bulbs to LED.

”“ Waste recycling is a good idea,

although I’m not sure it is fully integrated in all depts.

”

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