1. General information and brief reference to the organization that prepares the Management Report:
CTC SUSTAINABILITY CONSULTANTS SAC
CTC Consultores is a company dedicated to consulting in social responsibility and sustainability. Its main services include the preparation of sustainability reports under the standards of the Global Reporting Initiative (GRI), auditing of sustainability reports, social auditing, verification of BIC management reports, carbon footprint measurement, sustainability diagnosis and planning. CTC Consultores is a private, national legal entity, distinct from the BIC Company, which has the purpose of verifying, auditing or certifying companies with good corporate, social and environmental practices. As stated in its bylaws registered in electronic record No. 14051780 of the registry of legal entities of the Lima Office of the National Superintendence of Public Registries (SUNARP).
2. General information about the BIC company
a. AWAY PALLAY SAC BIC
b. RUC: 20602565409
c. Address: Calle. Padre Nicolás Barre No. 4, District and Province of Urubamba, Department of Cusco, Peru.
d. Avenida El Derby 254 Office 402, District of Santiago de Surco, Province and Department of Lima - Peru
e. https://pallay.pe/
f. Activities: Production, purchase and sale of alpaca and sheep fiber fabrics and yarns, artisanal production of jewelry, training in artisanal production.
3. Data on the approval of the Strategic Plan:
a. Date: September 22, 2023
b. Session No.: 01
c. Act No.: D0002
4. Management Report Period:
September 22, 2023 to December 31, 2023
5. Benefit Purpose:
Triple impact purpose: Away Pallay is a sustainable fashion company that has a triple social, economic and environmental impact. Social / cultural impact. 1. Make visible the textile process behind each loom made in Pallay, putting the weaver as the protagonist. 2. Preserve the ancestral technique of the backstrap loom that is part of our cultural identity. Economic impact. 1. Empower weavers. Women as an important part of the community's economic cycle. 2. Training in improving production. Environmental impact. 1. Sustainable textile practices in high Andean communities that are completely harmless to the environment.
6. Methodology used to measure and/or evaluate the impact on environmental and social objectives:
CTC Sustainability Consultants (CTC) was hired by AWAY PALLAY SAC BIC (hereinafter PALLAY) to perform the audit service of the activities carried out in the period described in point 4 to achieve compliance with the goals and objectives proposed in its current Strategic Plan (hereinafter the Plan) and the preparation of the Management Report (hereinafter the Report) .
a. Scope
The scope of the audit includes the texts, data, images, graphs, audiovisual records and statements contained in the aforementioned Plan, its related activities and those related to the period covered by the Report. The assurance level is type 1 - moderate.
b. Criteria The criteria used in the process:
● Accountability principles according to the international standard AA1000AP
● The principles of social responsibility according to the Peruvian technical standard ISO 26000 Social Responsibility Guide
c. Independence and competence
CTC is an AA1000AS Licensed Assurance Provider. The use and maintenance of this license is subject to the requirements and controls established by AccountAbility. We are also subject to the AA1000AS Code of Good Practice. CTC Consultores affirms its independence from Pallay, being free of bias and conflicts of interest with the organization, its subsidiaries and stakeholders.
The signing auditor is a professional with more than 13 years of experience in sustainability, expert in preparing sustainability reports, verification and auditing of social standards. He is also an Associate Certified Sustainability Assurance Practitioner of AccountAbility and a Lead Social Auditor with global IRCA registration. Both international associations require compliance with their respective codes of conduct and control mechanisms.
d. Limitations
At the time of the review, the scope and activities described were fulfilled without limitations. It is important to mention that Pallay has been a BIC Company since September 22, 2023 and its Plan was established on the same date. Therefore, the activities carried out before that date provide a prior context but are not part of this Report.
e. Methodology
The assignment has been developed following the requirements established in the international standard AA1000AS (Assurance Standard), the Peruvian technical standard ISO 26000: Social Responsibility Guide and the Peruvian technical standard ISO 19011:2018 Guidelines for the audit of management systems.
Below we detail these activities:
● Initial coordination meeting with the team responsible for Pallay.
● Review of the documents indicated in the scope section.
● Conducting 03 (three) interviews with those responsible for managing the social/cultural, economic and environmental impact
● Request for additional information to ensure the completion of the activities declared during the preparation of the Report.
7. Specific actions that BIC Company has been carrying out in compliance with its profit purpose during the period:
8. Any circumstance that has enhanced or hindered the achievement of the beneficial purpose of the BIC Company during the period:
The Pallay company has managed to integrate practices that have enhanced the achievement of its purpose as a BIC society, mainly through the strengthening of the culture and economy of the high Andean weaving communities in Cusco, Peru. The co-creation of timeless textile pieces, made with sustainable principles, has been relevant to make visible and preserve the ancestral technique of the backstrap loom, thus connecting the high Andean culture with the world. This approach has not only improved the economic conditions of the weavers, allowing them to contribute significantly to the family basket, but has also empowered the high Andean women through their textile knowledge, generating a positive impact both socially and culturally.
Pallay's commitment to sustainable practices, evidenced by its environmentally friendly production processes and the use of natural fibres such as alpaca and sheep, has been another key factor in strengthening its purpose. The company has achieved a balance between innovation in design, maintaining the authenticity of ancestral techniques, and environmental care. This approach has facilitated participation in fairs and business meetings, expanding its market and paving the way for export.
However, certain conditions have presented challenges for Pallay. The social and political situation experienced in 2023 in Peru, especially in Cusco, has negatively impacted tourism, reducing the influx of visitors with a high purchasing potential. In addition, the limited production capacity, conditioned by the complexity and time required for the manual production of the looms, has restricted Pallay's ability to meet a broader demand, especially in international markets. These factors have made it difficult to achieve higher production and sales volumes, affecting the company's growth and expansion potential.
9. Description of the actions with which the BIC Company has been contributing to the development of a purpose superior to compliance with the legal framework and corporate social responsibility:
No evidence has been found of fines or non-monetary sanctions for Pallay's failure to comply with laws or regulations on social, economic or environmental matters.
Pallay highlights its commitment to a purpose that goes beyond regulatory compliance (BIC) and stakeholder expectations. Below are actions that contribute to the development of higher purposes.
1. Cultural Preservation: Pallay has been shown to have established a business model that focuses on preserving the ancestral technique of the backstrap loom, vital to the high Andean culture of Cusco. Through direct collaboration with local community weavers, the company safeguards an endangered art form while ensuring its transmission to younger generations. This approach empowers communities by recognizing and valuing their cultural heritage, offering a means for their wisdom and traditions to endure.
2. Women's Economic Empowerment: It has been shown that by co-creating textiles with weavers, Pallay promotes significant economic inclusion of women in rural areas, allowing them to contribute substantially to the economic well-being of their families. It has been shown that this economic empowerment is accompanied by a strengthening of their social position within their communities, promoting gender equality and sustainable development.
3. Sustainable Practices: Pallay has been shown to incorporate environmentally friendly artisanal practices in its production process, from the selection of natural fibers to the use of dyeing and manufacturing techniques that minimize environmental impact. This strategy demonstrates a commitment to environmental sustainability, ensuring that the company's operations contribute to the conservation of local ecosystems.
4. Innovation in Design and Product: It has been evident that Pallay strives to innovate in the design of its products. By integrating modern trends with artisanal techniques, the company manages to create collections that appeal to both local and international markets. This fusion of the ancestral with the contemporary not only broadens the reach of its products but also introduces the cultural richness of the Andes to a wider audience, promoting appreciation and demand for authentic crafts.
10. Measurement and/or evaluation of the material social and environmental impact
| Triple Impact Purpose: Away Pallay is a sustainable fashion company that has triple social, economic and environmental impact |
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TO
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Social/cultural impact | Social/cultural impact | ||
| Activities | Indicator | AA1000 AP | ISO 26000 | |
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A.1.
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A.1. Make visible the textile process behind each loom made in Pallay, putting the weaver as the protagonist | Each of Pallay's pieces is distinguished by including a handtag that displays the weaver's photograph, thus guaranteeing recognition of her invaluable contribution. This commitment to the visibility and appreciation of artisans has generated a resounding impact on social media, capturing the attention of 128,000 followers on Instagram. In addition, Pallay has made a presence in prestigious international media outlets such as VOGUE and FORBES, consolidating its reputation in the field of sustainable fashion. The company has also been invited and participated as an exhibitor at the Fem Week Cusco event, reaffirming its commitment to promoting culture and female empowerment. | IT MEETS the Principle of inclusiveness, since it makes visible and values the work and culture of the high Andean weavers | COMPLIES Particularly with the principle of stakeholder participation and community development. |
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A.2.
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A.2. Preserve the ancestral technique of the backstrap loom that is part of our cultural identity | Between 80 and 90% of Pallay's production is made using ancestral techniques, ensuring that at least 20% of the weavers involved are under 30 years old. | IT MEETS the Principle of inclusiveness, since it makes visible and values the work and culture of the high Andean weavers | COMPLIES Aspects of "respecting cultural diversity" and promoting "fair labor practices," as well as "community development." |
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B
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Economic impact | Economic impact | ||
| Activities | Indicator | AA1000 AP | ISO 26000 | |
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B.1.
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B.1. Empowering weavers. Women as an important part of the community's economic cycle | A 2% increase in payment to communities has been implemented, reflecting a tangible commitment to their economic well-being. As a measure of the impact on female empowerment, a detailed study will be carried out. In addition, an exceptionally low turnover rate of less than 1% has been maintained, evidenced by just 1 in 36 weavers, highlighting the stability and satisfaction within the team. | PARTIAL A full assessment of women's empowerment is required, suggesting that there are still areas for more comprehensive implementation of the principles of inclusiveness. | PARTIAL In the areas of social responsibility related to labor practices and women's empowerment. |
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B.2.
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B.2. Training in improving production | In 2022, 100% of weavers benefited from specialized training in dyeing techniques with natural pigments. These trainings were carried out individually, focusing on enhancing the productive skills of each artisan. In addition, training in defect detection was included to reinforce quality control standards, achieving an impressive efficiency rate of 94%. | COMPLIES with the principles of inclusiveness and materiality | COMPLIES In aspects related to community development and responsible labor practices. |
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C
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Environmental impact | Environmental impact | ||
| Activities | Indicator | AA1000 AP | ISO 26000 | |
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C.1.
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C.1 Sustainable textile practices in high Andean communities that are completely harmless to the environment. |
During this period, ecological inputs have been used in the manufacture of the looms, such as natural fibers, plants and insects such as cochineal, preserving the ancestral technique of the backstrap loom and ensuring minimal environmental impact. Responsible production practices include optimizing the use of water during dyeing, ensuring the reuse of the resulting liquid waste in other dyeing processes or in soil irrigation. Likewise, products have been developed for packaging garments made from namesake, which reduces plastic consumption and waste, since its reuse by the consumer is promoted. Regarding transportation, the frequency of monthly trips has been minimal, so significant generation of greenhouse gas emissions associated with this activity is not expected. |
COMPLIES with the principles of inclusiveness and materiality | COMPLIES In terms of environmental responsibility |
About the environmental impact
A review was carried out of the different processes that form part of the organization's value chain. These involve obtaining raw materials such as natural fibers (shearing), spinning, dyeing, warping, transportation and packaging. Below we present the details of the evidence reviewed in this process.
● Shearing: This process consists of obtaining wool from livestock according to the type of wool. It is carried out by the weavers, and according to the company representatives, it is done in a respectful manner, taking care of the individuals who undergo shearing. It is not an activity directly controlled by the organization.
● Spinning: before proceeding to the respective spinning, a previous stage is carried out which consists of washing the wool, where water and detergent are used in optimal quantities. Pans are used to carry out the washing, which significantly reduces water consumption. It is worth mentioning that this process is not carried out in the river. The final destination of the effluent generated is unknown. Evidence photo: Pallay S1 034) detergent.
● Dyeing: This process is carried out with natural ingredients such as flowers, roots, and even insects that provide different shades to the wool. The water from the dyeing process is largely reused to obtain threads with less intense colors and a variety of shades. The plant waste generated in the dyeing process is composted, as indicated. On the other hand, the water resulting from the process is used to irrigate the soil.
● Warping: This process consists of an artisanal technique in which threads of different colors are interlaced to form looms with the agreed designs for making garments. There are no environmental aspects associated with this activity.
● Packaging: the protection of the garments that will be sold is carried out using bags made from tocuyo, it has a label and a ribbon woven by the weavers, the entire process is artisanal, reducing the impact compared to the use of plastic bags, since it allows the tocuyo bags to be reused by consumers.
● Transport of products: trips from the city of Cusco to the communities are usually made in a vehicle with a frequency of once or twice a month. At the time of the audit, there was no evidence of control over the fuel consumed throughout the period.
11. Results, conclusions and recommendations:
The conclusions are based on, and are subject to, the scope, criteria, methodology and limitations indicated in this independent report.
We consider that the evidence we have obtained provides a sufficient and adequate basis for our conclusions:
● No circumstances have been observed that indicate that the texts, data, images, graphics, audiovisual records and statements contained in the Plan and in the related activities are not reliable and do not provide an adequate representation of the activities for the fulfillment of its purpose of benefit as a BIC company.
● During the review, it was verified that the actions described meet the requirements of moderate assurance specifically referring to the accountability principles according to the international standard AA1000AP.
● The Plan and the activities linked to the preparation of the Report offer a reasonable and balanced presentation of PALLAY's performance in social responsibility management.
● The results of the interviews, document reviews and the activities described in the methodology section have not determined any indications or certainty regarding non-compliance (voluntary or involuntary) with the principles of social responsibility according to the Peruvian technical standard ISO 26000 Guide to Social Responsibility.
Recommendations:
It is recommended to consider the following actions focused on strengthening and effectively communicating your commitment to sustainable development and social responsibility:
● Improved training records for weavers: It is recommended to keep track of weavers' participation, differentiating the type of training that has been provided. One option could be to keep a photographic record that allows for more certain evidence of continued participation.
● Measuring Economic Impact: It is recommended that quantitative and qualitative methods be implemented to measure the economic impact of Pallay activities on weaving communities. This could include studies on the increase in family income, job creation, and the effect on the general well-being of the communities involved.
● Recording and Communicating Visibility Impacts: Develop a recording system that documents the results of the visibility strategies of the weavers and their ancestral techniques.
● Reformulation of the Environmental Objective: It is recommended that objective "C.1 Sustainable textile practices in high Andean communities that are completely harmless to the environment" be modified to "C.1 Implementation of sustainable textile practices in high Andean communities, minimizing environmental impact." This reformulation recognizes efforts to reduce environmental impact, while realistically acknowledging the challenges inherent in ensuring completely harmless practices in the value chain. Monitoring and recording consumption of materials, water, and fuel is also recommended.
CTC Sustainability Consultants SAC Lima March 7, 2024
Juan Ricardo Cuba Garcia
ACSAP A22102001
IRCA Auditor 6100858
Note: Subject to the terms described in the scope, this independent report has been prepared for Away Pallay in connection with its Plan and therefore has no other purpose and cannot be used in any other context.