As part of our 2030 ESG strategy, we have established new goals and baselines to disclose and measure progress:
People
Pepco Group is a multinational company operating across a wide range of geographies and jurisdictions. Strong business ethics and accompanying policies help to maintain responsible practices, protect human rights across the Group and value chain and uphold our reputation with our stakeholders. We are aware of the potential impact that any breach of ethical standards could have on the wellbeing and livelihoods of both our own employees and the people within our supply chain.
Priorities
- Develop our people
- Care for our colleagues
Associations and accreditations
- Ethical Trading Initiative aligned
- SEDEX: global data platform for supply chain assessment
Policies
- Anti-bribery and Corruption
- Supplier Code of Conduct
- Pepco Group Human Rights policy
- Child Labour Remediation policy
- Factory Audit policies
- Whistleblowing policy
| Goals | KPIs | FY23 | Progress/ Baseline FY24 |
|---|---|---|---|
| 100% of employees can participate in feedback channels by 2030 | Engagement survey score | Poundland only: 78% response rate | Pepco, PGS and Group only: 88% response rate |
| 40% women in senior positions by 2030 | % of women at top three leadership levels2 | New goal in FY24 | 28% |
| 100% of Pepco own-brand1 products are ethically sourced by 2030 | % of own-label products made in Category 1, 2 and 3 factories3 | New goal in FY24 | 97% |
| Perform annual audit of our factories | % of factories audited against our audit plan4 | 100% | 100% |
These new goals address our key intentions to effectively engage with employees, to promote diversity and inclusion in our Group and to ensure that we uphold and extend ethical standards across our supply chain.
1 Own-brand products = products offered to consumers under the Pepco, Poundland and Dealz brands, and manufactured by selected suppliers with design, qualities and packaging specified by Pepco Group.
2 Top three leadership levels = business leaders at Group level: CEO, CEO-1 and CEO-2 plus operating company management
3 Category 1, 2 and 3 factories are defined as having no-risk to medium-risk issues and are approved for new business with Pepco Business restrictions are imposed on factories with Category 4 and 5 grading for having high-risk or critical issues. Factories need to submit a Corrective Action Plan for all high-risk issues identified during the audit.
4 Defined as the percentage of social and ethical audits completed by our Group sourcing compliance team against the annual audit plan.
Own workforce
As a large retail organisation with 47,760 colleagues in direct operations across 20 countries, we recognise the essential role our people play in driving growth. We are committed to creating an environment where everyone feels valued, supported, and empowered to achieve their best. We actively encourage internal career progression and personal development. Our commitment spans the entire Group, ensuring all colleagues, regardless of role or location, benefit from competitive pay, career opportunities, inclusive policies, and effective engagement.
Employee training and development
We invest in colleague training and development providing mandatory, induction and development training to our people at least on an annual basis through our regional training centres. Additionally, we use tablets in stores to offer more e-learning options. A key focus has been on improving internal career pathways to retain the best talent.
Employee engagement
At Pepco Group, we have a wide range of channels to facilitate effective employee engagement, including feedback surveys, internal communication platforms, regular meetings, regional road shows and town halls. These provide us with the opportunity to share business performance, achievements and progress. Our ESG 2030 strategy goal is for 100% of employees to be able to participate in feedback channels by 2030. In FY24, we extended our employee survey across the whole Group and all employees have feedback channels available to them.
Diversity and inclusion
We remain focused on diversity, equality, and inclusion, regularly reviewing data from recruitment processes and feedback gathered through our annual surveys. Colleagues are empowered to be “champions” and can participate in various focus groups.
We have established a goal to drive improved representation of females in leadership positions. Our goal is to achieve 40% women in senior positions by 2030. We define senior positions as business leaders at Group-level CEO, CEO minus 1 and CEO minus 2, plus operating company management teams.
Gender pay gap
For FY24, our improved HR data and systems means that we can disclose gender pay gap by the country that we operate in. There are significant national variations influenced by local employment and hiring norms and the distribution of roles, with many women in store positions. We are committed to fair treatment and career support for all employees. Store positions, our largest employee group, follow standardised pay rates. We use grading and market benchmarks for other roles to ensure fair pay practices.
Discrimination
At Pepco Group, employees can report violations, such as discrimination or harassment, through a dedicated procedure. During FY24, 99 cases of discrimination were reported. In FY24, we launched a new, independent reporting process which has raised awareness and includes the ability to confidentially report discrimination. The increase in cases from FY23 is therefore expected and welcomed.
Grievance procedures
Since 2021, the independent whistleblowing provider, Safecall, has been used by the Group. Over this period, the number of reported cases has varied, prompting this year’s focus on improving the quality of reports through training and implementing a more refined investigation process. As part of these ongoing efforts, a report assessment process was introduced earlier this year, overseen by the Group Compliance team. This process ensures that reports are directed to the appropriate subject matter experts for management and investigation, providing greater visibility at the group level and a more efficient experience for the reporter.
Our whistleblowing policy has also been updated as referenced in the policy section to reinforce our commitment to conducting business with honesty, integrity, and promoting a culture of openness and accountability. We maintain a zero-tolerance stance on retaliation and strongly encourage individuals to voice their concerns, while remaining dedicated to supporting those who come forward. Going forward, we will incorporate cases of retaliation into our metrics, which are designed to monitor the overall effectiveness of the program. Additionally, as part of our proactive approach, employees are required to complete a dedicated training module based on the updated policy suite,
reinforcing our commitment to maintaining a culture of transparency and ethical conduct across the Group.
To ensure independence from local management when investigating cases, we have implemented measures that drive impartiality and objectivity throughout the process. This includes diverting certain cases to our Group-level team and introducing an investigator conflict of interest declaration ensuring that sensitive or complex matters are handled without bias or influence. Additionally, our newly introduced ‘triage process’ further reinforces independence by reviewing and classifying cases centrally, ensuring they are escalated to the appropriate level for investigation and resolution. This structure helps maintain the integrity and fairness of all investigations.
Pepcoolture Masters
We introduced a “Pepcoolture Masters” programme in FY23 to promote Company culture and recognise employees who embody Pepco values: growth, team spirit, simplicity, respect, and love of the customer.
During the programme’s implementation in 16 markets, we emphasised a fundamental belief that “being appreciated every day at work matters”.
Nearly 1,200 nominations came fin from across all markets. These were submitted by peers, who highlighted nominees whose values are genuinely reflected in their actions.
In collaboration with our local coordinators, we announced 99 local winners in each of the quarterly editions. This group included six global winners, one for each value and one for Pepco Management team’s special prize.
Supply chain workforce
We work with our suppliers to develop sustainable and ethically sourced product options which meet our customers’ preferences at an affordable price point. Our vertically integrated supply chain enables better oversight and influence over the ethical and environmental management practices of our partners and therefore facilitates a higher level of risk mitigation. Our FMCG products are sourced directly from both domestic and international suppliers including some of the world’s biggest brands. More details of our Supply Chain Human Rights approach and programmes can be found in the ESG section of our website.
We have strong policies in place to protect the integrity of our supply chain, including a Pepco Group Supplier Code of Conduct which applies to all suppliers and contractors. The Code of Conduct is aligned with the Ethical Trading Initiative (ETI) Base Code, an internationally recognised code of labour practice founded on the conventions of the International Labour Organisation (ILO). It includes expectations concerning human rights (with specific reference to child labour), ensures colleagues in factories are treated fairly, and lays out our position on bribery, transparency and unauthorised subcontracting as well as environmental provisions. In FY24, we have further extended our policies with regard to the protection of human rights within our supply chain, these can be found in the Pepco Group Compliance Policies Manual published on our website.
We have also established a new ethical sourcing goal to complement our previous ethical audit goal. Over the last few years, we have disclosed the percentage of ethical audits across all our supplier factories. We will retain this goal as it is linked to the 10% ESG element of the Executive remuneration and is important to maintain focus on this key programme. We also wanted to be able to demonstrate the progress and outcomes that our audit programme is driving with suppliers, therefore we have established a new goal related to showing the percentage of low-risk/high-performing suppliers against our ethical standards.
1 Own-brand products are defined as products offered to consumers under the Pepco, Poundland and Dealz brands, and manufactured by selected suppliers with design, qualities and packaging specified by Pepco Group.
2 Category 1,2,3 factories are defined as having no-risk to medium- risk issues and are approved for new business with Pepco Business restrictions are imposed on factories with CAT 4 and CAT 5 grading for having high-risk or critical issues. Factories need to submit a Corrective Action Plan for all high-risk issues identified during the audit.
3 Defined as the percentage of social and ethical audits completed by our Group Sourcing Compliance team against the annual audit plan
Improving working conditions for workers
We audited a ready-made knit garments manufacturer in the outskirts of Dhaka, Bangladesh. The factory failed our initial audit for these reasons:
- failure to pay minimum wages to 23 workers of total 570 workforce;
- dangerous working conditions, e.g. no automated smoke detection and fire alarm system, locking feature on exit door; and
- inadequate building approval and fire licence coverage for factory.
Following our audit, the factory management started taking the necessary corrective action. We worked closely with the factory in the remediation process by reviewing their CAP progress report and guiding them to take appropriate corrective action. As a result, the following improvements were made:
- factory management pay at least minimum wages to all workers since our audit; and
- automated smoke detection and fire alarm systems were installed and building construction approval and fire licences were obtained from the Local Government authority.
In April 2023, on request of the supplier, we arranged an unannounced follow-up audit in the factory and the factory was assessed as CAT 3 by resolving all Zero Tolerance issues. Due to our audit process, living conditions of several workers in the factory were improved.
Ethical sourcing approach
We have strong policies in place to protect the integrity of our supply chain, including a Pepco Group Supplier Code of Conduct which applies to all suppliers and contractors. The Code of Conduct is aligned with the Ethical Trading Initiative (ETI) Base Code, an internationally recognised code of labour practice founded on the conventions of the International Labour Organisation (ILO). It includes expectations concerning human rights (with specific reference to child labour), ensures colleagues in factories are treated fairly, and lays out our position on bribery, transparency and unauthorised subcontracting as well as environmental provisions
Working with our supply chain
Supporting social and ethical practices
We believe in helping our suppliers to continuously develop their social and ethical standards in partnership with the Group. As part of this, we prioritise:
1
Commitment to developing the livelihoods of the people who make our products, which includes ensuring that the workers in our supply chain are:
- working willingly and not forced to work;
- not discriminated against by their employer;
- working in safe working conditions and are not exposed to dangerous working conditions; and
- receive all due wages for their work.
2
Providing support for suppliers to help them develop and improve their workers’ livelihoods through safe working conditions, fair wages and other basic human rights.
3
Supporting our suppliers to contribute to sustainable development through partnerships such as the Heart to Heart charity described in the exceptional employer section below.
4
We have a risk-based audit approach, taking into consideration factories’ geographic location, reputation, the type of manufacturing process and the most recent ethical audit rating. Frequency of audits are increased based on the risk associated with the factory.
Auditing process
All active factories are audited at least once a year. All potential new factories must go through the ethical audit process and must pass the ethical compliance audit to be eligible to do business with us. During the audit, we rigorously check issues related to human right violation e.g. wage retention, child labour, discrimination, restriction on freedom of movement, any form of forced labour and safe working conditions. We develop a Corrective Action Plan (CAP), which is agreed with the supplier and factory management during the closing meeting on audit date. After each audit, we share an ethical audit report with compliance (CAT) risk ratings with the suppliers and factories. Factories with CAT 1, CAT 2 and CAT 3 are deemed to have no-risk to medium risk issues and approved for new business. Business restrictions are imposed on factories with CAT 4 and CAT 5 grading for having high-risk or critical issues. Factories need to submit a CAP for all high-risk issues identified during the audit.
The compliance team reviews the CAP submitted by factory management and arranges follow-up audits to review and monitor progress against the Corrective Action Plan. Frequency of audits are increased based on the most recent ethical audit rating, reputation and other risk factors. In addition, the compliance team conducts unannounced supply chain monitoring audits to control unauthorised subcontracting of Pepco Group merchandise manufacturing.
Supplier environmental practices
Our voluntary set of Pepco Group Environmental Guidelines For Suppliers which cover the following key areas:
- environmental management system;
- environmental regulations;
- recording and minimising greenhouse gases (GHGs);
- waste management;
- increased water usage efficiency;
- chemical management;
- safeguarding natural resources and biodiversity;
- sustainable packaging; and
- sustainable raw material sourcing for products.
Product
At Pepco Group, we aim to democratise sustainability for our customers by offering affordable choice and demonstrating that price is not a barrier to sustainable and ethically produced products. One of the most impactful ways that we can positively contribute to our customers and communities is through offering a larger range of affordable and sustainable products available in our stores.
Priorities
- Responsibly source product materials
Associations and accreditations
- Better Cotton Initiative
- SEDEX: global data platform for supply chain assessment
- ZDHC: Zero Discharge Hazardous Chemicals – a collaboration platform for textile suppliers
Policies
- Supplier Code of Conduct
- Supplier Environmental Guidelines
- Product quality specifications
- Factory Audit policies
- Whistleblowing policy
As part of our new 2030 ESG strategy, we focus on responsible sourcing of materials through the Product pillar. We have set a new goal which applies to all our own-brand textile products sourced for sale throughout the Group.
| Goal | KPI | FY23 | Progress FY24 |
|---|---|---|---|
| Increase responsibly sourced materials to at least 30% in own-brand products by 2030 | % of certified cotton in own-brand range by 2030 | 21% | 26% |
100% of our suppliers are audited against our Ethical Sourcing policy and some of our materials are certified to external standards such as the Recycled Claim Standard (RCS), the Global Recycled Standard (GRS) for recycled materials, the Organic Content Standard (OCS) or the Global Organic Textile Standard (GOTS) for cotton, the Forest Stewardship Council for products from forestry, such as paper or wood, or Oeko-TEX for textiles. We want to focus our efforts, and our goal, on textiles and specifically cotton as clothing forms the largest percentage of our product mix and revenue.
Certified cotton
We have been a member of the Better Cotton Initiative (BCI) since 2022. The Better Cotton Initiative (BCI) aims to support farming communities socially, environmentally and economically. 2.13 million farmers in 22 countries now have a licence to sell their cotton as Better Cotton and the initiative has reached almost 4 million people whose working lives are connected to cotton production. Those people are trained to use water efficiently, care for soil health and natural habitats, reduce use of the most harmful chemicals and respect workers’ rights and wellbeing. The tonnage of cotton that Pepco Group sources under the BCI scheme is recorded via the BCI membership platform each calendar year. It is independently assessed and subsequently reported, providing an external validation of Pepco Group’s progress against this responsibly sourced material goal.
By sourcing cotton through Better Cotton, Pepco contributes to raising the standards of cotton production, which translates into the wellbeing of farmers and the local environment.
In addition to responsibly sourced cotton, we provide our customers with a range of affordable, sustainable product options across our clothing, general merchandise and FMCG lines including Oeko-Tex and Forest Stewardship Council (FSC) eco-certified products, recycled polyester clothing and vegan and vegetarian ranges. We label those products accordingly, to help our customers clearly identify more sustainable choices and show our commitment to environmentally responsible production.