Forced Labour and Child Labour
in Supply Chains Report

This report is made by The Avon Company Canada Limited in compliance with Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”) for the financial year ending December 31, 2023.

References in this report to “Avon Canada”, “Company”, “we”, “our” and similar terms are to The Avon Company Canada Limited or to those who work for it.

This report highlights the measures Avon Canada has implemented within the last financial year to prevent and mitigate the risk of forced labour or child labour in both its business and supply chains.

In 1886, David H. McConnell, corporate founder, made a commitment to corporate citizenship, aiming to contribute to the well-being of society and the environment. Today, Avon Canada continues to uphold this commitment which remains central to its ethical business conduct. As such, during our previous financial year, Avon Canada has taken the following measures to combat the risk of forced labour and child labour throughout its operations and supply chain, including the following:

• We continued to implement due diligence policies and processes to identify, address and prohibit the use of forced labour and child labour, and to carry our activities in accordance with our codes of conduct;
• We conducted audits of our suppliers to ensure their compliance with our supplier code of conduct (the “Supplier Code”) and regularly monitored such suppliers to ensure their ongoing adherence to our policies; and
• We have developed and implemented mandatory training materials for our procurement employees to raise awareness regarding forced labour and child labour.

These measures have currently been implemented in specific areas of our business segments.

Details of the above actions are set forth in this report.

Avon Canada continues to apply policies and processes that support human rights and socially responsible business practices to prevent the occurrence of forced labour or child labour in any part of its supply chain.

Policies

a. Supplier Code

Avon Canada has a Supplier Code of Conduct (the “Supplier Code”) which sets forth the minimum standards pursuant to applicable laws and regulations that the Company and its worldwide suppliers are required to comply with in their operations. The Supplier Code expressly forbids the use of unlawful forced labour and child labour in the production of the goods purchased by Avon Canada or any services provided to Avon Canada.

As a prerequisite of doing business with Avon Canada, each supplier must sign an acknowledgment, representing and warranting that (i) it has read and understands the Supplier Code; (ii) it agrees to comply with the Supplier Code; (iii) it is already in compliance with the Supplier Code and all applicable laws and regulations; (iv) its supply chain is compliant with the code; (v) it is not aware of any violations of the Supplier Code; and (vi) it will report to Avon Canada any suspicion or awareness of violation of the Supplier Code by itself or its supply chain.

Furthermore, the terms and conditions provided in the agreements entered into with Avon Canada’s suppliers and all subsequent purchase orders explicitly mandate that suppliers undertake to manufacture all merchandise in adherence to laws concerning forced labour and child labour.

b. Code of Conduct and Employee Handbook

Avon Canada strongly believes that all employees have a role to play in conducting business consistent with Avon Canada’s ethical standards. As a result, Avon Canada has implemented a code of conduct (the “Code of Conduct”) to ensure that its workforce adheres to its guidelines and to provide a framework to identify potential issues and guidance. The Code of Conduct promotes a work environment that is both safe and respectful, free of violence, discrimination and harassment, and encourages responsible corporate citizenship, notably by supporting human rights, prohibiting forced labour and child labour, and requiring supply chain integrity.

In addition, Avon Canada provides all employees with its employee handbook (the “Employee Handbook”). Such handbook reiterates Avon Canada’s commitment to maintaining a culture and workplace that embraces its five core values: trust, respect, belief, humility and integrity.

c. LG H&H’s Human Rights Policy

Our parent company LG H&H has a human rights policy (the “Human Rights Policy”) which reflects the principles of human rights specified in the Universal Declaration of Human Rights and the Guiding Principles on Business and Human Rights presented by the United Nations Commission. The Human Rights Policy clearly addresses humanitarian treatment, the prohibition of forced labour and child labour and the prohibition of discrimination, among others. LG H&H recently revised its Human Rights Policy to further strengthen its human rights management system, including compliance with labor relations laws in each country, to better identify human rights risks in its overall business and supply chains.

Due Diligence Processes

Considering that we highly value the relationships cultivated with our suppliers, we strive to support them in enhancing the working conditions of the workers involved in creating our products. This includes ensuring that any migrant worker has unrestricted movement and can access all their personal and government issued identification documents.

Given our dedication to conducting business with integrity in all our relationships, we refrain from engaging business with suppliers which do not have policies and procedures in place to prohibit the use of forced labour and child labour.

Prior to awarding any business, audits are conducted through third-parties on suppliers that are producing Avon Canada’s finished goods to verify their compliance with specific labour requirements and to identify areas for improvement. Additionally, all existing suppliers are regularly audited to monitor compliance and obtain a clear understanding of the potential possible risks associated with forced labour and child labour. Satisfactory results following such audits are required for suppliers to continue doing business with Avon Canada. The Company reserves its right to conduct audits on any supplier suspected of using forced or child labour.

We initiated the identification of human rights risks in our activities and supply chain by examining our direct suppliers, analyzing the countries from which they source their materials, the age of all workers, whether migrants workers are employed and whether a labour agency is used. This process, combined with the regular audits we conduct on our suppliers, allows us to improve our understanding of potential modern slavery risks.

Given the preliminary nature of our risk assessments, we acknowledge that there are still gaps in our analysis. Through our continuous due diligence processes, we recognize that the following aspects in our activities and supply chain potentially pose a greater risk of forced labour and child labour: the types of products we source, the manufacturing of raw materials used in our products (such as palm oil, mica, paper and cotton), our Tier 1 and Tier 2 suppliers, the use of outsourced, contractor or subcontractor labour, and the use of migrant labour by our suppliers. We also understand that these risks may be more prevalent in the manufacturing and agricultural industries.

Avon Canada is dedicated to minimizing the risks related to forced labour and child labour by asking our direct suppliers to verify that they do not source any materials, goods or labour originating from trade sanctioned areas and requiring them to abide by the principles of our Supplier Code. If we determine that the risk of modern slavery is unacceptably high, we will choose not to engage in any further business or production with the supplier in question.

Since Avon Canada has not yet identified instances of any forced labour and child labour, no actions haven been taken to address and resolve any such occurrences or to compensate any loss of income to the most vulnerable families resulting from remediation. However, if it determined that we have caused or played a role in any incidents of forced labour or child labour, we are firmly devoted to establishing an approach to effectively mitigate such issues.

In order to raise awareness of the risks associated with forced labour and child labour, all new employees working in our procurement department are required to complete a training with respect to our Supplier Code and our social responsibility procedures. These employees receive additional training that are relevant to their functions, as deemed necessary.

With the objective of assessing the effectiveness of our processes and procedures, we have partnered with an external agency to regularly conduct an independent review of our measures designed to prevent modern slavery. Such assessment of effectiveness allows us to adequately adapt and modify the measures we take to further mitigate the risks of forced labour and child labour. During the last financial year, this third-party demonstrated that Avon Canada’s actions align with industry standards.