1. General information and brief reference of the organization that prepares the Management Report:
CTC SUSTAINABILITY CONSULTANTS SAC
CTC Consultores is a consulting firm dedicated to social responsibility and sustainability. Its main services include the preparation of sustainability reports under the Global Reporting Initiative (GRI) standards, sustainability report audits, social audits, verification of BIC management reports, carbon footprint measurement, and sustainability assessment and planning.
CTC Consultores is a private, national legal entity, distinct from BIC, whose purpose is to verify, audit, or certify companies with good corporate, social, and environmental practices. This is reflected in its bylaws, registered in electronic entry No. 14051780 of the registry of legal entities of the Lima Office of the National Superintendency of Public Registries (SUNARP).
2. General data of 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, Santiago de Surco District, Province and Department of Lima - Peru
e. https://pallay.pe/
f. Activities: Production, purchase, and sale of fabrics and yarns made from alpaca and sheep fiber, 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. Deed No.: D0002
4. Management Report Period:
January 1, 2024 to December 31, 2024
5. Purpose of Benefit:
Triple Impact Purpose: Away PALLAY is a sustainable fashion company with a triple social, economic, and environmental impact. Social/Cultural Impact: 1. Make the textile process behind the company visible. of each loom made at PALLAY, putting the weaver at the center of attention. 2. Preserve the ancestral technique of the backstrap loom, which 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 friendly to the environment.
6. Methodology used to measure and/or evaluate the impact on environmental and social objectives:
CTC Consultores en Sostenibilidad (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 texts, data, images, graphics, audiovisual recordings, social media posts, and statements submitted during the execution of the Plan, its related activities, and references to the reporting period. The assurance level is Type 1.
b. Criteria
The criteria used in the process:
● The accountability principles according to the international standard AA1000AS v3 (2020)
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 Practices. CTC Consultores affirms its independence from PALLAY, remaining free from bias and conflicts of interest with the organization, its subsidiaries, and stakeholders.
The signatory auditor is a professional with over 17 years of experience in sustainability, an expert in preparing sustainability reports, verification, and auditing social standards. He is also an AccountAbility Certified Sustainability Assurance Practitioner and a Lead Social Auditor with global IRCA registration. Both international associations require compliance with their respective codes of conduct and oversight mechanisms.
d. Limitations
The scope and activities described during the review were met, without any limitations.
e. Methodology
The compliance review has been developed following the requirements established in the international standard AA1000AS v3 (2020), 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 PALLAY team.
● Review of the documents and records 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 implementation of the activities declared during the preparation of the Report.
7. Specific actions that BIC has been carrying out in fulfillment of its purpose of benefit during the period:
8. Any circumstance that has enhanced or hindered the achievement of the profit-making purpose of the BIC Company during the period:
During 2024, PALLAY managed to strengthen its market presence thanks to a strategy of expansion and brand consolidation. The company established commercial alliances with renowned hotels and restaurants, such as Morena, the Belmond group, Sonesta, and Explora, which generated recurring orders and increased demand for its products. At the same time, digital management played a key role in this growth, with a renewed focus on social media that boosted content production and resulted in a significant increase in the number of followers (from 5,000 to 20,000), which was accompanied by greater engagement across its various platforms, attracting new customers and strengthening the brand's reputation in the sector.
In addition to these advances in visibility and positioning, PALLAY achieved financial consolidation, accessing strategic loans that facilitated its expansion. The company obtained key financing through the Wiese Fund, which granted it a loan of 150,000 soles at a preferential rate of 4%, in addition to a second loan of 37,000 soles. These resources were essential to sustain and boost production, allowing it to respond to growing demand. In this regard, a notable increase in the number of product orders was recorded in the communities of Acchahuata and Chalwaccocha. This growth was also reflected in the expansion of the weaving team, thus ensuring greater production capacity.
2024 represented a year of significant challenges for PALLAY, largely due to the aftermath of the 2023 political and economic crisis. The instability affected key sectors such as tourism, leading the company to adopt a cautious strategy during the first quarter of the year. A strategic adjustment was subsequently made mid-year, which involved reformulating the business plan to capitalize on the sector's growth.
9. Description of the actions with which BIC Society has been contributing to the development of a purpose higher than 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 social, economic, or environmental laws or regulations.
Through a business model focused on sustainability and female empowerment, by 2024 PALLAY had generated a positive impact in the cultural, economic, and environmental spheres. Its actions go beyond regulatory compliance, contributing to the development of a higher purpose. Below are actions that contribute to development.
Sustainable practices: It was observed that PALLAY integrates sustainable methods into its production process. handcrafted products that prioritize respect for the environment. From the choice of fibers and dyes natural, as well as the application of dyeing and warping techniques with minimal impact on the environment. The company demonstrates a firm commitment to sustainability and seeks to ensure that its activities contribute to the preservation of local ecosystems, promoting responsible and environmentally conscious production.
Cultural Preservation: It was evident that PALLAY establishes a business model that focuses on the preservation and valorization of the ancestral technique of the backstrap loom, a key element in the Cusco's high Andean cultural identity. Through training and co-creation with the weavers, the The company not only ensures the continuity of this tradition, but also positions it in the market with a reach of local and international clients. The visibility of this technique has has been reinforced through its participation in initiatives such as the Chamba Warmi book, the award Caja Arequipa's Entrepreneurial Pride, the partnership with the Belmond hotel group, and various communication platforms that have highlighted its impact.
Women's Economic Empowerment: PALLAY has achieved a tangible economic impact in the high Andean communities with which it works. In 2024, it consolidated the participation of new communities like Huilloc Alto, expanding the number of active weavers and diversifying their production. PALLAY continues to promote the economic inclusion of women in rural areas, allowing them to generate sustainable incomes and contribute to the well-being of their families. In addition, Through a mentoring model and training for weavers, their skills have been strengthened, the quality of their products improved, and their economic independence has been fostered.
Innovation in design and product: It was evident that PALLAY has expanded its catalogue of products, incorporating new pieces with traditional textile interventions. This strategy has allowed to diversify its offer, open new markets and guarantee the continuity of the backstrap loom in contemporary applications. These actions have also allowed PALLAY to achieve annual revenue growth, reflecting the growing acceptance and demand for its products.
Development of experiential experiences: It was evident that PALLAY has developed an initiative of Experiential tourism that allows visitors to interact directly with the weavers in their own communities, promoting the appreciation of high Andean culture. This experience offers an immersion in ancestral textile processes, allowing participants to learn about the weaving techniques. This initiative strengthens the connection with its customers and reinforces recognition of the cultural value of Andean textile art.
10. Measurement and/or evaluation of the material social and environmental impact
Description of the processes
The review of the organization's value chain processes covered raw material procurement, spinning, dyeing, warping, weaving, packaging, and transportation.
● Shearing : Wool is obtained in an animal-friendly manner. This process is not directly controlled by the organization.
● Spinning : The wool is washed with water and detergent in vats to optimize water consumption. The final destination of the effluent generated is unknown.
● Dyeing : Natural ingredients (flowers, roots, parasites, insects) are used. Water is reused to achieve various shades, and the plant residue is composted. Excess water is used for irrigation.
● Warping : A traditional technique of interlacing threads with no obvious environmental impact. ● Weaving : 100% handmade using the ancient backstrap loom technique.
● Packaging : Reusable tocuyo bags are used instead of plastic, with hand-woven labels and ribbons. FSC-certified paper bags are also used.
● Transportation : Monthly trips are made between Cusco and the communities without control over fuel consumption.
11. Results, conclusions and recommendations:
The conclusions are based on the scope, criteria, methodology, and limitations established in this independent report. We consider the evidence gathered to be sufficient and appropriate to support our conclusions.
No situations have been identified that suggest that the contents of the Plan and related activities, including text, data, images, graphics, social media, audiovisual recordings, and statements, are unreliable or do not adequately reflect the actions intended to fulfill its purpose as a BIC company.
The activities implemented by the organization, which have been reviewed within the scope of this audit, present a balanced and reasonable view of PALLAY's performance in terms of social and environmental responsibility management.
The various awards obtained throughout the year, such as: Caja Arequipa Entrepreneur Pride Award (Top Award and Family Value Category) and the one awarded by the The recognition of the Wiese Foundation, as well as the brand's selection to be included in the Chamba Warmi book as one of the outstanding Cusco companies, constitutes additional support for the assessment of the organization's social performance. These recognitions reflect the commitment to responsible and sustainable practices, reaffirming the positive impact of the actions implemented. They also strengthen the trust of various stakeholders in the organization's social management, validating its efforts to generate value for both the community and the environment in which it operates.
Improvements were observed in the recording of training sessions for weavers, through monitoring their participation and differentiating between the types of training provided. However, the documentation of these records still presents opportunities for improvement. It was evident that payments to trainers, as in the case of Martín Solís, are recorded through bank transfers, but without invoices or other supporting documentation.
According to the “Report of the Anthropological Study on the impact of PALLAY's activity on the lives of high Andean weavers”, 84% of those interviewed mentioned that they use the money earned to cover household expenses and food, 64% indicated that they use the remuneration for their children's education and 12% reported that they have been able to pay for urgent health services after having received payment for an order.
Recommendations:
It is recommended that you consider the following actions focused on strengthening and effectively communicating your commitment to sustainable development and social responsibility:
● Measurement of the environmental impacts generated by the organization's activities, considering the product life cycle approach, with the aim of establishing controls at all stages, both those over which there is direct control and those over which there is influence.
● Measure the impact of using dung as fuel. Although it is a practice carried out outdoors, people's exposure to the smoke generated by combustion must be monitored.
● It is also recommended to keep a record of the consumption of materials used in dyeing, as well as water consumption and fuel estimates for transporting the garments.
● It is suggested to hold talks on ergonomics and hand care.
● Strengthen documentation mechanisms by implementing more detailed records and minutes that include training topics, learning assessments, and monitoring the practical application of acquired knowledge.
● Implement digital tools (such as automated spreadsheets or management software) to more efficiently monitor cost and productivity variations.
● Develop periodic reports with key metrics on the economic, social, and environmental impact of PALLAY's actions. It is suggested that quarterly summaries be generated to identify areas for improvement.
CTC Sustainability Consultants SAC
Lima, March 18, 2025