DECLARATION OF THE FINANCE SECTOR AND SACTWU ON THE APPAREL AND FOOTWEAR INDUSTRY

1. Preamble
   1. The Financial Sector representatives, who are signatories to this declaration, recognise that:
      1. there is a need to support and find ways to enhance the buy local campaign in respect of products in the apparel and fashion manufacturing sector, particularly clothing, textile and. leather.
      2. the job losses in the apparel, clothing, textile and footwear industries constitute a serious crisis and accept there is an urgent need to take immediate action to stop these job losses and the consequent rampant unemployment.
      3. there is need to have a solid and stable local apparel manufacturing sector from which they can source their products.
   2. The signatories to this declaration commit to use their efforts to encourage the Clothing Retail sector, particularly in the application of their buying decisions, to promote higher levels of local procurement in an endeavour to create employment or save jobs in South Africa.
   3. The parties agree to encourage SACTWU and the Clothing Retail sector to enter into a joint declaration for a period of six months, during which time they will continue to engage with each other to finalise a Code or Agreement for the entire sector.
   4. It is understood and accepted that
      1. the Asset Consultants and Multi-managers who are signatories to this declaration will recognise compliant behaviour by the asset management and banking parties to this agreement, as guided by Trustees.
      2. the Labour movement will influence the employee representatives on the boards of trustees of retirement funds to recognise and reward compliant behaviour by the parties to this agreement through the movement of funds to those parties.
2. Commitments:

   The parties to this agreement will mobilise the assets over which they have influence, subject to Trustee guidance and as expressed in Fund Mandates, to facilitate and leverage the achievement of the following objectives:

   • Support for the buy local campaign in the industry.

   Action:

   1.  
      1. We will encourage all respondents and clothing retailers to join the proudly South African campaign.
      2. To the extent that the Financial Services Sector purchases clothing, textile and footwear items, we undertake to procure these from retailers/companies that support the buy local campaign.
      3. We will work to expedite the implementation of the Growth and Development Summit agreement in respect of those provisions pertaining to the financial services sector, and recommit ourselves to achieving the objectives of this agreement.
      4. In order to understand the real underlying issues in the clothing, textile and footwear sector, we will commission a study to investigate and understand fully the sustainability of the sector over different time horizons and scenarios, (including with the involvement of SETA's to bring the manufacturing industry up to the required level of competence/efficiency) to be able to achieve the objectives sought by SACTWU. The coordination of this study and communication of its findings will be the responsibility of a sub-committee of the signatories to this declaration.

• Trustees of Retirement Funds to be encouraged to shift resources to companies that are committed to long term sustainable development in the country.

  Action:

1. We will develop proposals to be included in the mandates given to asset managers by Trustees that define how the funds over which they exercise fiduciary responsibility are to be applied in:
   1. the making of targeted investments required of retirement funds in terms of the Financial Services Charter.
   2. the making of investments into companies engaged in the clothing, textile, and leather sector.
2. Subject to agreement with Fund Trustees, and as a last resort, to disinvest from those companies that continue to be non-compliant with the Code as anticipated in the process referred to in 1.3above. Asset managers undertake to sensitise Trustees as to the full implications of such an action on the potential returns of their Funds.

• An undertaking to impress on the clothing retailers to support the buy local declaration.

  Action:

  1.  
     1. Asset Managers have already written to the clothing retailers to motivate them to purposefully engage SACTWU on the "buy local" campaign and will continue to impress on them the importance of reaching agreement.
     2. It is recognised that the issues highlighted herein, if left unresolved, could lead to union action and other consequences that may undermine value for investors. Therefore the signatories to this declaration undertake:
        1. to exercise their influence and, subject to Trustee agreement in terms of Fund Mandates, voting rights attaching to equity investments to:
           1. hold management accountable for engaging SACTWU on this campaign;
           2. to sanction those Clothing Retailers who do not provide adequate support for the buy-local campaign;
           3. to secure full reasons for any decision not to engage with SACTWU and/or participate in the buy local campaign and/or to participate in the Nedlac process;
        2. to engage with Clients and Trustees to ensure that, in respect of their fiduciary responsibilities over the Funds we manage, they fully understand and support the actions proposed and contemplated herein, and to respect their rights to direct the course of our actions as their representatives. We will encourage Trustees to develop their view and appreciation of the scope of actions that will fulfill their responsibility to act in the best interests of members, and that this could include a perspective that is broader than focusing solely on investment returns;
        3. If all other action contemplated fails, and the performance of the company, as reflected in projected share price and earnings is threatened, signatories will exercise the normal sanction of disinvestment from that company.

1. Parties
   1. The Parties to this declaration are:
      1. The Southern African Clothing and Textile Workers Union
      2. Asset Management Companies as Named

Signed at Cape Town on 5 December 2003