Environmental Matters

Climate action in production

In the global textile and apparel industry, CO₂ emissions mainly occur in the cultivation and production of textile fibers and during energy-intensive processing stages, such as dyeing, washing, or bleaching. HUGO BOSS is conscious of its shared responsibility to protect the environment and the climate. The implementation and development of environmentally and climate-friendly processes at our suppliers is as important to us as the implementation of corresponding measures at our own production sites.

Internal guidelines and standards on climate action issues in the supply chain are defined by the central Group Strategy and Corporate Development division and implemented in close cooperation with the Sustainable Supply Chain Management department. In addition, the central Environmental Management team coordinates appropriate measures at the Company’s own production sites in close alignment with the local management teams. The Managing Board, in person of the CFO/COO, is regularly informed about the progress made toward achieving the Group’s climate protection targets, particularly within the Sustainability Committee. In addition, the Group Strategy and Corporate Development division reports directly to the CEO.

Targets

As a signatory to the Fashion Industry Charter for Climate Action under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC), HUGO BOSS, together with other companies in the fashion industry, is striving for net zero climate-damaging emissions by 2050. As part of our commitment to this target, our sustainability strategy places great emphasis on significantly reducing emissions not only in our own area of responsibility but also along the entire value chain. As a first important milestone, we are pursuing the target of effectively reducing our CO₂ emissions along the entire value chain by at least 50% by 2030 (base year: 2019), and thus without additional offsetting. The scope 1, scope 2 and scope 3 emission categories included in this target are presented in the table below.

Measures

We are committed to global climate protection with numerous measures and initiatives at our own sites and in the supply chain. In order to define suitable measures, HUGO BOSS is actively collaborating with other signatories to the Fashion Industry Charter for Climate Action. In fiscal year 2023, we focused, among other things, on collaborating with other signatories in joint working groups addressing crucial topics such as “decarbonization,” “lowering carbon manufacturing,” and “policy engagement.”

In line with the UNFCCC, we also work together with our suppliers to sustainably reduce environmental impacts along the supply chain. In this context, compliance with legal environmental requirements is an integral part of all supplier contracts. In addition, our Environmental Policy published on our corporate website describes a variety of environmental protection principles, both for our own production sites and those of our suppliers. It reflects our activities and objectives pursued within the framework of the Fashion Industry Charter for Climate Action. Our Supplier Code of Conduct also contains comprehensive guidelines for compliance with environmental protection requirements. In addition, HUGO BOSS sets binding sustainability criteria for its suppliers with regard to the use and processing of textile fibers and materials for its more sustainable product offering in the publicly available WE CARE commitment.

As part of regular environmental audits conducted by external auditors, we monitor, among other things, our suppliers’ energy consumption and CO₂ emissions. In the event that violations of environmental requirements are identified, we work together with the respective supplier to develop action plans, the implementation of which is reviewed in follow-up audits. We also carry out relevant training sessions to inform our suppliers regularly about environmental and climate protection measures and to work towards the establishment of standardized energy and environmental management systems. This also includes trainings towards good carbon accounting practices. In order to increase the transparency and measurability of the environmental impacts of our partners, in cooperation with the Fashion Industry Charter for Climate Action and selected signatories, in 2021 we developed an online “Climate Action Training for the Fashion Industry.” The training provides garment, textile, and footwear manufacturers with basic knowledge of climate change, the environmental impact of the fashion industry, energy efficiency, and renewable energy, as well as practical expertise on carbon accounting.

To further intensify its measures to achieve net zero by 2050, HUGO BOSS has developed a decarbonization roadmap. In this context, in 2023, we conducted a greenhouse gas (GHG) assessment to identify potential additional measures to sustainably reduce greenhouse gas emissions in our upstream value chain. Going forward, we aim at further intensifying the collaboration with our suppliers to effectively reduce emissions in our supply chain, focusing on suppliers with the highest emissions, particularly those with high energy demands.

In order to reduce the emissions and other environmental impacts associated with the cultivation and processing of natural materials, and fully in line with our Sustainability Strategy, we want to “leverage nature positive materials” by exploiting the potential of regenerative farming. Going forward, this means putting an even stronger emphasis on sourcing materials that not only reduce our industry’s environmental footprint but also contribute to biodiversity preservation. Our goal is to source 100% of natural materials in alignment with regenerative farming principles or through closed-loop recycling by 2030, thus also contributing to climate protection. This also includes cotton, which is by far the most used material at HUGO BOSS. Sustainability

The climate impact of our own production activities is relatively low compared with that of external suppliers, as in particular the upstream stages of the value chain involve CO₂-intensive processes. Nevertheless, the reduction of energy consumption and CO₂ emissions at our own production sites plays an important role for achieving our targets. We continue to develop our Environmental Management in line with the international standards ISO 14001 (environmental management) and ISO 50001 (energy management). Our own production site in Izmir (Turkey) – by far the largest of our own production sites globally – has already been certified in accordance with both standards since 2014.

To further reduce CO₂ emissions at our own production sites, we are investing primarily in energy-efficient technologies, the modernization and renewal of technical equipment, and increasing the share of renewable energies. For example, HUGO BOSS has been obtaining its energy from renewable sources at all its own facilities since 2020. In this context, in 2023, we commissioned new photovoltaic systems at our production sites in Izmir (Turkey), Morrovalle (Italy), Coldrerio (Switzerland), and Radom (Poland), while we also continued investing in LED lighting. The knowledge gained as part of our own environmental management will help us make further progress in reducing the environmental and climate impact in the supply chain together with our suppliers in the coming years.

Performance indicators

Our scope 1 and market-based scope 2 emissions in fiscal year 2023 amounted to 30,063t, which is broadly in line with the prior-year level (2022: 29,921t), but 7% below the base year (2019: 32,064t). This development mainly reflects a reduction in Group-wide energy consumption and an increase in the share of green electricity compared to the base year. The scope 3 emissions, which were not subject to the voluntary review with limited assurance according to ISAE 3000 (Revised), amounted to 1,056,845t in 2023, representing a 1% decrease compared to the prior year (2022: 1,063,612t), and an increase of 44% compared to the base year (2019: 731,576t). The latter primarily reflects the strong business performance of HUGO BOSS in recent fiscal years, as the large majority of our CO₂ emissions are generated in the cultivation and production of textile fibers and during energy-intensive processing stages. The scope 3 emission categories included herein are presented in the table below. In fiscal year 2023, our total CO₂ emissions calculated according to the Greenhouse Gas Protocol (GHG Protocol) thus amounted to 1,086,908t, representing a 1% decrease compared to the prior year (2022: 1,093,533t) and a 42% increase compared to the base year (2019: 763,640t). The scope 3 emissions included in the total CO₂ emissions were not subject to the voluntary review with limited assurance according to ISAE 3000 (Revised).

Circularity

In light of the comprehensive environmental impact of the global textile and apparel industry, HUGO BOSS considers itself responsible for making a positive contribution to protecting ecosystems and preserving valuable resources. We have therefore firmly anchored the topic of circularity in our sustainability strategy. In this context, the design of our BOSS and HUGO products, which is fundamentally geared towards durability, becomes even more important.

Due to its strategic importance to HUGO BOSS, the topic of circularity is managed by the central Group Strategy and Corporate Development division, which, among other things, defines and coordinates the future direction and objectives. Operational responsibility lies primarily with the design, product, and sales managers, who define and implement corresponding product-related measures. In addition, topic-specific task forces systematically drive the exchange of experience in the area of circularity. Within the framework of the Sustainability Committee, the Managing Board, in person of the CFO/COO, is regularly informed on the progress in achieving the Company’s circularity targets. There is also a direct reporting line from Group Strategy and Corporate Development to the CEO.

Targets

HUGO BOSS is increasingly working on establishing a consistent circular business model. In this context, we have set ourselves the target of enabling 80% of our apparel products to become circular (measured by production volume, number of apparel products) by 2030.

Measures

Already in the phase of design and production, we set ourselves the goal of further extending the durability of our products, increasingly closing material loops, and promoting the use of high-quality, recyclable materials. The use of renewable and recycled raw materials is key in this regard. For example, we are targeting a steady increase in the proportion of recycled fibers in our products. Beyond this, the durability of our products is to be further improved not only by means of a timeless design, but also via the use of particularly resistant materials and corresponding processing steps. In this context, already in 2022 HUGO BOSS entered into a partnership with Swiss innovator HeiQ AeoniQ. Together, we are developing and producing a cellulosic filament yarn, which is intended to be recyclable, and thus a more sustainable substitute for synthetic fibers. In fiscal year 2023, BOSS successfully launched its first two polo shirts based on this technology, replacing almost 90% of the product’s polyester. In contrast to synthetic fibers, no environmentally harmful microplastics are produced when washing products based entirely on AeoniQ yarn. Consequently, exploring and leveraging alternatives to synthetic fibers also contributes to our strong commitment to “fight microplastic,” which is firmly anchored in our sustainability strategy. Sustainability

The know-how of our employees, especially in the areas of design, product development, and sourcing, is of particular importance in the development and production of circular products. For this reason, trainings represent an important measure to continuously expand knowledge about circular materials and designs and to ensure the application of circular design principles in main work steps. In fiscal year 2023, HUGO BOSS introduced a virtual circularity training course, accessible via the Group-wide “HUGO BOSS University” platform, covering topics such as the use of recycled and renewable materials as well as circular design choices with regard to product recyclability. This training is mandatory for relevant departments working on the design and production of our circular products. HUGO BOSS also updated its internal Circular Product Policy in 2023 and conducted respective internal trainings on the new content. The policy is based on existing and expanded industry standards and includes important criteria to ensure circularity at the stage of design and development. Its key elements are published on our corporate website. group.hugoboss.com

In addition to developing and manufacturing circular products, HUGO BOSS is also putting a strong focus on establishing circular business models. In this context, already today we offer a Repair & Rewear service in selected own stores in Germany in order to extend the lifetime of products that have previously been sold. In addition, we are operating the online resale platform “Pre-Loved” in France, where customers can return and purchase used BOSS and HUGO products. EU Taxonomy

Performance indicators

While parts of our BOSS and HUGO collections were developed and manufactured directly on the basis of the Circular Product Policy for the first time in 2022, the proportion of circular apparel products in both brands’ collections grew to a total of 17% in 2023. We aim for significantly increasing this share in the coming years.