Responsible sourcing policy

1. Introduction

At Lyst, operating our business in a sustainable way to ensure the environmental and ethical impacts of our business are suitably managed is one of our core values. Our values guide us when choosing our employees, suppliers and partners and we expect these stakeholders to share our values. Our "suppliers" are defined as the direct suppliers of products and services across Goods Not for Resale (GNFR) and Services. Our "partners" are defined as the stakeholders who sell the products advertised on Lyst's platform across multi-brand retailers and mono-brands. While we are a technology company and can only control the direct impacts of our business, we know the fashion products transacted on our website can have significant environmental and social impacts in production and consumption. We want to support our suppliers and partners, so that the footprint behind these services and products has decent working conditions, respect of workers and their human rights, that animals have high standards of animal welfare and that impacts to the environment are minimised.

Aim

This Responsible Sourcing Policy ("the Policy") sets out our core principles and approach. It is supported by our Responsible Sourcing Code of Conduct ("the Code") that suppliers and partners are expected to meet and forms part of our business relationship. Regarding modern slavery, we understand that this is part of our legal obligation under the UK Modern Slavery Act 2015.

Implementation of this Policy in our business sits within our ESG team, supported by cross-functional tribes aligned on our ESG mission. Our approach focuses on ensuring appropriate governance mechanisms, policies and procedures are in place, setting clear expectations for employees, suppliers and partners, capacity building, risk assessment, monitoring progress and reporting. We know collaboration is key to responsible sourcing and in tackling modern slavery. We are committed to working collectively across our business, suppliers, partners, and industry. We have engaged expert sustainability consultants to develop our Responsible Sourcing system in conjunction with our ESG team.

2. Who we are

Lyst is a fashion technology company, and premium shopping platform. With over 160 million annual shoppers (as of 2023), Lyst offers the most comprehensive range of products from 18,000 (as of 2023) of the world's leading brands and stores. For brands and stores, Lyst's goal is to power success online, driving meaningful direct sales within a highly trusted brand environment.

As a technology company, Lyst's material environmental and social risks and opportunities are:

Climate change: GHG emissions (Scope 3) from data management to power the platform and from our suppliers and operations. Sustainable products and consumption: Support customers to shop better by providing credible sustainable options through our partners. Tracking and communicating inventory uptake to partners to reduce production and associated resources and waste. Environmental: Managing GHG emissions (Scope 1 & 2), waste management and consumables procured for our operations. Social: Managing our responsibilities regarding modern slavery, human rights, labor, equality, diversity, inclusion and belonging.

Lyst Ltd is registered in the UK and was established in 2010. Turnover from FY22 brought Lyst over the threshold for compliance with the UK Modern Slavery Act.

3. Principles & Approach

3.1 Our Business & Supply Chain

We take a risk-based approach to responsible sourcing and tackling modern slavery. It starts with mapping our business, suppliers and partners to understand the impacts on people, planet and animal welfare. These can be direct impacts, from our suppliers and partners, which we can control or indirect which our suppliers control. The scope is:

Mapping Our Business And Supply Chain

Our business

Offices and Platform

• Lyst operates from one leased office in London
• 21 Mincing Lane, London, EC3R 7AG. 27,000 sq/ft.
• A digital platform runs Lyst aimed at direct sales across fashion products including:
  • Clothing
  • Shoes
  • Accessories
  • Jewellery

Employees

Approximately 150 people are directly employed by Lyst (as of 2023).

Our supply chain

Direct Suppliers:

• 5 suppliers make up 75% of our spend (as of 2023) providing data management services in the main, plus consumables, office leasing and cleaning services and digital marketing services to support running our business.

Indirect Partners:

• Our partners are multi-brand retailers and mono-brands. As of 2023, we have up to 18,000 brands on our platform. These partners control the supply chain behind these products including manufacture, distribution and logistics.

Our customers

As of 2023, over 200 million users and over 160 million customers interact with the Lyst platform globally per year.

3.2 Sustainability & Our Responsible Sourcing System

We are at an early stage in managing our environmental and social impacts but are committed and making progress. We understand our most material impacts are in reducing the GHG emissions associated with our technology platform, influencing customers to shop better and requiring our partners to take responsibility for their supply chains.

Our Responsible Sourcing system is a core element of our sustainability approach to manage the environmental and social impacts across our business and supply chains. This incorporates modern slavery and human rights, environmental management and animal welfare. The elements in our Responsible Sourcing approach are illustrated in this Policy as well as through clear commitments in a Responsible Sourcing Code of Code with due diligence to assess compliance, remediation, training and reporting. Our governance arrangements to implement this in our business are outlined below. We believe tackling responsible sourcing in supply chains is a marathon, not a sprint, so continuous improvement is required. Each year our Modern Slavery Statement and company reporting will report on our progress.

Governance

A key element of our Responsible Sourcing system is the governance to operationalise it. This includes commitment from our CEO, board and day to day management from the ESG team and supporting cross-functional tribes.

Designated team members who manage the day to day Responsible Sourcing activities include:

• Finance: Ensure governance through our compliance with financial regulations and maintaining alignment with our financial goals.
• ESG: Lead the formulation and revision of our sustainability strategy, ensuring its alignment with global standards and tracking its progress.
• Legal: Oversee compliance and legal considerations related to our sourcing practices, ensuring we adhere to all regulations and commitments.
• Partnerships: Implement governance protocols when vetting new partners, ensuring they meet our policies and standards and maintain those relationships over time.
• People: Set governance processes for training and development on responsible sourcing, ensuring all employees understand and adhere to our policies.

We work closely with suppliers and partners on managing sustainability risks and unlocking opportunities. We engage with our suppliers and partners and require them to nominate a senior manager to undertake responsibility for compliance with our Responsible Sourcing Code of Conduct and due diligence. This is the day to day contact for our Responsible Sourcing leads. Outside of Responsible Sourcing, our People team set out our expectations of, and our responsibilities towards, our employees through our employee handbook, which details our policies and processes.

Responsible Sourcing Policy & Supplier Code Of Conduct

Governance

• CEO
• Finance, Legal, Partnerships & People
• ESG Team

Goods & services procured

• Suppliers
• Partners

Due diligence

• Supplier mapping of top 20 suppliers & partners
• Supplier & partner questionnaire
• Database of questionaire responses and supporting documentation

Training & collaboration

• Employees
• Suppliers
• Partners

Reporting

• Annual Modern Slavery Statement
• Annual Financial Statements

4. Due Diligence

Our due diligence approach to responsible sourcing and tackling modern slavery is based on the risk of each individual element of our direct and indirect supply chains. Our Responsible Sourcing Code of Conduct is a key aspect of this. Our approach is summarised under these sections below.

• 4.1 Our Business
• 4.2 Suppliers & Partners
• 4.3 Responsible Sourcing Code of Conduct

4.1 Our Business

4.1.1 Team Members Directly Employed

On Boarding

Right to work: Our HR function ensures all directly employed team members have the correct legal right to work status, individual address and bank account details as part of our onboarding process. For these reasons, risk of modern slavery and human trafficking occurring through these routes are low.

Monitoring

Grievance process: We have grievance processes for employees to address any concerns or issues that they have. Managers: Key managers in our business are responsible for the safety and wellbeing of those who work in their areas whether they are employees or contractors. Employee monitoring: We monitor key employee details via our HR system to identify and investigate any unusual patterns which might indicate an issue. Whistleblowing: We have a whistleblowing policy available which details how to raise concerns anonymously. This policy is reviewed regularly. All new starters are made aware of the policy as part of their induction. Our policy encourages people to report through the whistleblowing hotline.

4.1.2 Our Business and Office Environmental Management

Scope 1 & 2 emissions are monitored and reduced through landlord engagements. Electricity is on 100% renewable contract. Engineers are encouraged to follow best practices with writing efficient code to reduce server capacity.

4.2 Suppliers & Partners

In our business we source services from suppliers and engage with partners through two main routes.

Services: 5 third party service providers provide the majority of key services to us including IT/data management, digital marketing and our office leasing.

We have no direct control of the environmental and ethical impacts of our service providers. As part of working together, we request that they meet our Responsible Sourcing Code of Conduct, as relevant to the services they provide. As part of our Responsible Sourcing system, we will conduct training with them and will risk assess their status against our code using a supplier questionnaire. We have used a risk-based approach to this engagement starting with suppliers who may have the highest risk due to transaction volumes. We will grow our engagement year on year as part of a continuous improvement approach, including re-reviewing responses from suppliers once they have been engaged.

Partners: Our multi-brand retailers and mono-brands control the supply chain behind their products included on the Lyst platform. These are:

• Multi-brand retailers: We have a direct partnership with these retailers, they carry various brands, including some of the mono-brands we also partner with indirectly;
• Mono-brands (direct): These are brands that we have a partnership with directly; and
• Mono-brands (indirect): These are the individual brands that we are indirectly partnered with through our relationships with the multi-brand retailers but who we don't have direct partnerships with. Our collaboration with the multi-brand retailers leads to an indirect partnership with the mono-brand.

We have no direct control of the environmental and social impacts of our partners. As part of working together, we request that they meet our Responsible Sourcing Code of Conduct, as relevant to their products and categories on the platform. To support our partners in managing their sustainability risks, but also grow opportunities to support customers to shop better, we have started to conduct awareness raising training with them and will risk assess their status against our code using a partner questionnaire. We have used a risk-based approach to this engagement starting with partners who may have the highest risk and opportunity due to transaction volumes and their sustainability performance based on a desk top peer review. We will grow our engagement year on year as part of a continuous improvement approach, including re-reviewing responses from partners once they have been engaged.

4.3 Responsible Sourcing Supplier Code Of Conduct

In line with the importance of responsible sourcing and the promotion of fair and safe working conditions and environmental protection within our supply chain, all supply partners must meet the requirements in our Responsible Sourcing Code of Conduct as relevant to the goods and services they provide to us. As a minimum these require our partners to meet their legal obligations in the following areas with supply chain traceability and accountability included:

• Human rights, labor and modern slavery
• Health & safety
• Environment
• Animal welfare

The Code of Conduct defines the requirements for suppliers on modern slavery based on the requirements of the UK Modern Slavery Act 2015 and best practice including the Ethical Trading Initiative Base Code (ETI) and UN Guiding Principles on Business and Human Rights.

A major focus has been on assessing compliance with the UK Modern Slavery Act obligations, including Part 6 of the Act: Transparency in Supply Chains which makes the supplier or partner responsible for engaging and tracking its supply chain. We conducted the risk assessment for 20 of our partners and suppliers.

4.4 Implementation

We are seeking supplier and partner feedback from the role out of the questionnaire to ascertain the best way to gain compliance with our responsible sourcing requirements.

5. Monitoring & reporting

Offices & platform

We maintain data and records on supplier and partner engagement and risk assessment. This includes:

• The information suppliers and partners provide us in response to our Sustainability Questionnaire is maintained in a Database; and
• Any instances of modern slavery or other non compliance identified to us by our suppliers and partners.

We monitor our progress on meeting our Responsible Sourcing system and will agree KP/s to track success in this pilot project.

We report on progress in annual reporting and our annual Modern Slavery Statement.

In FY24, the Lyst Whistleblowing policy will be updated, and a stakeholder reporting mechanism will be rolled out. We will continue reviewing our policies and procedures each year.

6. Training

Employees: As part of our induction, every new employee is introduced to our Responsible Sourcing approach. This includes modern slavery and environmental management in our business. Training to employees on modern slavery will be delivered in FY24.

Partners: Our Responsible Sourcing leads worked alongside the consultants as they developed the system and a pilot to engage, train and risk assess 15 of our largest partners.

7. Collaborations

To scale our activities and solutions, we will consider joining industry and collaboration groups in the future.