Sustainable Procurement

Great products are created with sustainability at their core. This means purchasing sustainable raw materials using ethical criteria, to manufacture our own brands. We are constantly innovating and we design and purchase products that use sustainable raw materials. We prefer to purchase from suppliers that can achieve a positive impact on a larger scale and make long-term progress.

Falabella's own brands form a strategic pillar. These brands provide an exclusive portfolio with the latest trends at competitive prices. They also provide differentiation and greater value for our customers. Falabella has greater influence over the production of its own brands and can extend its environmental and social commitments to its supply chain

How do we do it?

  • + Verde
    We created a program that identifies standards that can accredit the source of products, which we call +Verde, with the purpose of systematically improving the traceability of our raw materials from Asia. This program identifies those products that contain at least 50% of their materials certified as sustainable by an internationally recognized entity. We have mainly focused on:
      - Materials: The company's own brands prioritize recycled materials, organic attributes and fair trade.
      - Control: Each sustainable material must be certified by a reputable international organization.
      - Packaging and labeling: The +Verde program minimizes packaging material waste, and prioritizes FSC (Forest Stewardship Council) certified containers, packaging and labels.
    Falabella Retail already has a portfolio of more than 3,800 products in the +Verde program.

  • Haciendo ECO
    Sodimac offers customers products and services with environmental and social attributes within the Haciendo ECO initiative. These include several cleaning, organization and household item lines made from plastic waste received at recycling collection points. They form part of the first circular economy initiative by a retailer in South America and are the result of an alliance with TriCiclos and Comberplast. ECO products must meet standards established by the quality control department in order to use special labeling. They must include more than 50% recycled content, be biodegradable in less than six months, be reusable, proven to efficiently use energy and water during their manufacture, and be free of VOC, which are chemical particles that are harmful to health. They must also meet recognized standards and manufacturing them must safeguard natural resources and mitigate any environmental effects.

    Sodimac already sells more than 5,300 sustainable products, some of which were made with recycled material from Sodimac's recycling collection points.

  • Working, health and safety conditions
    We operate our business in a legal, ethical and socially responsible manner. Collaboration requires not only complying with labor legislation, but also adopting universal human rights principles. We build long-term relationships with our suppliers, foster their growth, safeguard their working capital and encourage their commitment to sustainable production, which involves the following initiatives:
      - Practical Compliance Guide for Suppliers: we have produced a guide that illustrates the corporate integrity parameters guiding our business approach, and the behavior expected of our suppliers in their relationship with Falabella. This can found here.
      - Social responsibility clauses: by the end of 2020, 54% of supplier contracts in the retail business and 81% in the real estate business had social responsibility clauses, which specify the ethical and human rights conditions that suppliers must respect.
      - Environmental clauses: Overall, 27% of supplier contracts have an environmental clause, which rises to 52% for home improvement suppliers.
  • Monitoring and auditing
    Sedex (Supplier Ethical Data Exchange) is an organization that grants us access to the SMETA Social Audit Protocol. This is used to encourage our own-brand suppliers to adopt good practices that ensure responsible and integral development.

    Sedex arranged a remote evaluation, due to travel restrictions as a result of the COVID-19 pandemic and the required employee protection to avoid contagion. This evaluation was not formally considered a SMETA audit, but we adapted these visits to a virtual format, in order to identify and mitigate any serious conditions in the workshops that manufacture our products.

    We support and regularly train all our suppliers where we have identified potentially negative social impacts, to improve their conditions and standards.

  • Engagement with suppliers and sellers

    At Falabella we believe in collaboration and we transmit best practices to our suppliers, as we believe this is key to managing a supply chain that is environmentally and socially responsible. Therefore, we produced our recent Practical Compliance Guide for Suppliers and we continually train suppliers in topics such as crime prevention, free competition, ethics, human rights and non-discrimination.

    The Practical Compliance Guide for Suppliers establishes the company's commitment to caring for the environment and complying with environmental regulations. It also states that Falabella expects its suppliers to comply with environmental regulations and to take the required precautions to ensure they do not engage in conduct contrary to those regulations. Falabella published in this Guide the compliance standard that it expects of its suppliers in relation to various issues such as:

      - Integrity
      - Crime prevention
      - Free competition
      - Working conditions
      - Human rights

    Falabella prohibits forced and child labor, in accordance with international conventions and regulations, and requires that its suppliers comply with national and international regulations on the prohibition of forced labor, smuggling migrants and human trafficking. Suppliers must strictly comply with the regulations governing child labor and the labor regulations applicable to the working conditions for their own employees, together with those related to the legal minimum wage, social security, and occupational health and safety.

    Further information can be found in the Ethics and Governance section.

    A specific example of supplier engagement is the Tottus Good Agricultural Practices Program, which trains and supports food producers and distributors on issues such as product safety, environmental protection and human safety during the planting, fertilization, spraying, harvesting and selection stages.

    Local sourcing and support for entrepreneurs

    At Falabella we are committed to helping people improve and update their skills, now and in the future. Therefore, we collaborate with others to create jobs and improve skills and facilities, which benefits everyone.

  • Mallplaza Entrepreneurship Model: Mallplaza encourages local communities and their inhabitants to develop using a regional entrepreneurial platform linked to its business strategy, while improving its value proposition to its customers and making it even more attractive.

    The model consists of a gradual program of benefits and mutual value for both the entrepreneur and Mallplaza through continuous training, commercial area management and the entrepreneur’s contribution to the value proposition. This model also identifies potential business partners.

    During 2020, Mallplaza incorporated more than 5,300 entrepreneurs and sellers into its 25 urban centers, with differentiating proposals covering healthy food, agri-food, personal care, handicrafts, design, decoration, entertainment and pet products, which provided visitors with alternative products and services and reactivated the local economy in Chile, Peru and Colombia.

  • #ApoyemosALosEmprendedores: An Open Plaza social focus is encouraging local entrepreneurs. Therefore, they were invited to participate in virtual talks on entrepreneurship and social network management in Chile and Peru, and a catalog was provided to advertise their products, which exceeded 1,000 companies in 2020.

  • Apex Community Showrooms Program: The objective is to present a showcase of the best businesses close to Open Plaza shopping centers. The project relied on an alliance with Sercotec and the Santiago Chamber of Commerce, which gave entrepreneurs the opportunity to exhibit their creations in a privileged area within shopping centers. It was awarded second place in the 2020 Innovation Awards, selected by the Chilean Chamber of Shopping Centers.