Alpargatas

Hello Everyone!

This our first published annual sustainability report prepared according to the standards of the Global Reporting Initiative (GRI), the international standard for reporting sustainability-related content.

This interactive page will give you an overview of themes addressed in the report, as well as highlight both challenges and achievements for 2021.

Summary of the

2021

Annual Sustainability Report

Brasil EUA

#We are

Alpa

We are connected with society as a company, we are aware of our important role and the strength of our brands.

havaianas

A Brazilian brand and global leader in open-footwear, offering products that go beyond sandals.

Present in more than 350 thousand points of sale across Brazil.

Present in 130 countries.

More than 260 million pairs sold each year across the world.

rothys

A Californian brand of footwear and accessories that combines style and comfort, made from recyclable materials and fibers.

In 2021, Alpa started the process to buy-back 49.9% of its shares

To date, it has recycled over 100 million plastic bottles to manufacture its products

Over 2 million customers in the US and Canada

ioasys

A startup specialized in digital solutions and innovation

Purchased by Alpa in May 2021, it is responsible for driving the company’s digital transformation and has already made important deliveries such as updating FlagShip Havaianas and the B2B Ecosystem

Over 400 people focused on technology, user experience, and design

The content of this Annual Report refers to Alpargatas Corporate and Havaianas

Our presence

Active in 130 countries

Headquartered in São Paulo

4 plants in Brazil

1 distribution center in Extrema, MG

10 offices

*In addition to satellite operations in Alagoa Nova and Mogeiro, managed by Campina Grande and Santa Rita.

MapaAlpha

Rothy's

Headquarters in San Francisco, California

1 office in New York

1 office in Shanghai

Plant in Dongguan (China)

Proprietary stores in the US

Online sales in the US and Canada

Ioasys

Offices in Belo Horizonte and Lavras, MG, and in São Paulo, SP

Our strategic

journey

We are a global, digital, innovative, and sustainable powerhouse of desired and hyperconnected brands.

Global

Investments in global expansion of Havaianas, especially in Brazil, China, the US, and Europe.

Digital

Constantly searching to expand our digital presence with new technologies, and increasing DTC (Direct-to-Consumer) and B2B (Business to Business) sales.

Innovation

New products and materials, new categories and partnerships. Global launches!

Sustainability

Innovation connected to sustainability and shared value creation, looking for comprehensive and systemic solutions along the entire supply chain.

Learn more about our strategic pillars.

Value

creation

In order for our business to remain sustainable, it must address the interests of all our audiences, this means searching for positive impact in society and the environment.

Learn how Alpa made this happen in 2021:

Governance

We adopted a robust governance structure, with high standards for management and market communication. We also control corporate and operating risks and have an organization responsible for Compliance, and for ethics and conduct policies and codes.

Socioenvironmental management was strengthened with the creation of the “Sustainability and Reputation Area”, and the “Sustainability Committee”

The Alpa Sustainability Strategy, comprised of the Circular Economy, Responsible Operations, D&I, and Local Development pillars was launched, with 12 targets for 2030.

The company is part of B3’s Level 1 Corporate Governance, which is made up of the companies with the best governance practices

The Executive Board (Directors) is responsible for managing the business, and includes: 1 Chair and 10 Deputy-Chairs (4 of them statutory)

The Board of Directors is comprised of 8 members (5 elected by the controlling block, 1 representing minority shareholders, and 2 independent members)

It is supported by four committees: Auditing, People, Strategy, and Finance

The Sustainability Committee reports to the CEO and is responsible for the strategic alignment and direction of the theme within the company. It has eight members, one of them independent, and is international in scope

Our people

In 2021, the People area was further driven by investments and innovations to improve employee journeys. We want to be the best place for people to work!

In 2021, Alpa employees received

32.072
hours of training
via ALU (Alpa Learning University), which expanded its activities to include Havaianas Franchisees

Launched ALUFlix, a platform for content streaming that includes digital training

Created the Sustainability Academy that launched a Webseries dedicated to the theme, with 13 episodes with 2 thousand views in just 6 months

Recognized as one of the best companies to work for by the IGPTW

The results of the climate survey show that 62% of our employees are proud to work for Alpa!

Published the Corporate Policy on Respect for Diversity, together with a number of discussions, trainings, and workshops on the theme

Digitized the People area using people analytics, artificial intelligence, and agile mindset technologies

Users

and
Partners

Alpa is constantly connected to understand user trends
and behaviors. Our product portfolio is constantly reviewed in
search for new materials and channels to fulfill consumer desires.

The Havaianas Pride line of flip-flops, apparel, and accessories donates 7% of net sales to global projects to fight prejudice and support the LGBTQIA+ community.

Over R$
2.4
million

were donated to global NGO All Out

458

incidents of online psychological support provided to the LGBTQIA+ community around the world in 2021

Drove initiatives to reduce Alpa’s environmental footprint, such as the Aquarius project, which replaced the cartons used in Havaianas packaging with envelopes, reducing paper use by 2.7 thousand tons, also optimizing transportation and storage.

Launched TNS Havaianas, a sneaker where 60% of the soles and 50% of the uppers are made of renewable and recycled materials.

Created the Havaianas Team Brazil, a collection of exclusive prints. Seven percent of total sales will be donated to support Olympic and Para-Olympic athletes.

Started to provide service in Brazilian sign language (Libras) on its e-commerce channels

The ReCiclo reverse logistics program collects ad disposes of sandals discarded by users. It currently has over 162 collection points around the world that received 10,372 kg of sandals

Suppliers

We review our suppliers considering compliance with legislation, their manufacturing process and quality, health, safety, and environment practices, dignified working conditions, use of restricted substances, and traceability.

For the second consecutive year Havaianas obtained the highest score (96%) among the 50 retailer brands in the chain traceability analysis performed by the Fashion Revolution Index of Fashion Transparency (IFT).

All

our suppliers are approved based on Alpargatas criteria.

Individualized service for suppliers during the Covid-19 pandemic

Ninety percent of our suppliers, or 60% of our purchases by value, are located in Brazil

Some 226 new suppliers contracted in the year

Suppliers are monitored and managed from time to time using approval and re-approval processes that include audits and document analyses

Society

We recognize our responsibility as agents of change in society, and search for a better and more inclusive world with equal opportunities for all each and every day.

The transformative power of education is the basis of the initiatives of Institute Alpargatas (IA), our main agent of social activities in Brazil.

200
thousand

The Institute helps children and adolescents.

R$
4.56
million

invested

Learn about Instituto Alpargatas main projects

Developing the Company’s Social Responsibility Strategy

Hired 25 people from the Alpa TRANSForms Program that focuses on expanding opportunities for trans persons to join the workforce

Set aside R$ 5 million to support the complications emerging from the Covid-19 pandemic, as well as masks, footwear, and basic baskets of food

The 13th Alpa Bem-Faz (Does Good), an annual volunteer event, collected R$ 48 thousand in 2021, and performed 25 volunteer activities with the involvement of 1,555 volunteers

Operations

Continuous improvement and operational excellence and efficiency are the core drivers of Alpa’s vision of the future, and are the bases of the major transformations we are witnessing in our industry, supply chain, and distribution.

Implemented the Program of Excellence in Manufacturing and Logistics, making manufacturing more flexible and agile

R$
600
million

initial investment in efficiency, cost reduction, and improved service levels

R$
20
million

invested to build the Havaianas Innovation Center in Campina Grande, PB, inaugurated in 2021

The amount of water used per pair of footwear in our plants dropped 21% by volume in 2021

The amount of energy used dropped 9.5% in GJ.

Greenhouse gas emissions dropped 2.7% (tCO2e/pair)

A new distribution center is being built at our Campina Grande, PB plant, which will provide faster, safer, and more efficient service to global demand before the year is out

Market

In 2018 we designed Alpargatas’ long-term value creation strategy. This strategy has proven effective ever since, and 2021 was a year of results.

Although 2021 was still impacted by the Covid-19 pandemic, Alpa’s results remained solid. Revenue more than tripled in the past three years - 3.5x

Net profit went from:

18
%

Alpa’s annual profit margin

Please go to our Financial Statements for our full financial results.

In 2021 Alpargatas invested in Ioasys and Rothy’s, and completed the divestment of the Mizuno and Osklen brands

Exports of Havaianas already account for 32% of total net revenue. In Europe, sales reached a record level of over 12 million of the 31 million pairs sold abroad

In Brazil 230 million pairs of flip-flops were sold. The brand grew at an annual rate of over 14%