Pre-read:

Higg FEM Tool Evolution

Technical Workshop -
Verification
Session 3 - June 11 and 13, 2024

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 Goal of this consultation process:

Goal &
Your involvement throughout our technical workshops will ensure that
Higg FEM is evolving to meet the needs of the industry, reflect the
diverse perspectives of Cascale members, and include evolving

Objectives
regulatory requirements. Together, we can ensure the Higg FEM
continues to drive positive change on a global scale.

Objective of this technical workshop session:

Through this workshop session, we aim to gather member intelligence,

feedback, and insights to support collective decision-making in order
to update Higg FEM 2024 and shape a tool that reflects the needs of
our members. Your feedback is vital in shaping the future of the Higg
FEM.

What’s next?

● Other sessions
● Analysis & specific technical proposal made by Cascale
● Global Member Webinar and open consultation period
● Final analysis & specification for FEM 2024 made by Cascale
● Development and testing on platform by Worldly and Cascale, for
launch in November 2024

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Context on This Consultation Process
The Higg FEM has evolved since its creation to continuously improve and better serve
the industry. The goal of the tool has always been to drive convergence in the
industry around a common environmental assessment for manufacturing facilities.
However, the context has evolved and so has its purpose. Goals are for the whole industry to:

If originally, the FEM was used mainly as a Performance Management tool between ● Support regulatory
brands and manufacturers, driving continuous improvement on environmental
compliance / secure market
management practices, it also quickly became the preferred tool by many brands
and retailers to assess and manage Code of Conduct compliance in their supply access
chain.
● Drive convergence / reduce
More recently, with voluntary efforts such as Science Based Targets driving the need
duplication
for robust Scope 3 data, and eventually the advent of mandatory performance
disclosures (in particular through the EU’s Corporate Sustainability Reporting
● Enable performance
Directive, CSRD), the FEM must again evolve to meet quantitative performance
impact measurement needs that have become a market access issue for the improvement
industry.
● Deliver on Cascale’s strategic
The FEM development roadmap presented here supports this evolution imperative,
plan impact pillars
as we see the industry rapidly moving to address the new disclosure requirements.
We see member input and alignment as the core value proposition of Cascale in the
development of this tool. We are excited to discuss these proposed changes with
you and hope you will find the relevant information in this pre-read for a constructive
workshop discussion.

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01
FEM
Development
Roadmap
 Higg FEM Objectives and Identified Issues
Performance Management
Purpose, objective Drive continuous improvement on
environmental management practices
Question types ● Demonstrated improved practices
(illustrative) (progressive, aspirational)
Current identified issues ● Too many detailed/advanced
questions for some facilities, lack of
gated L2 and L3 info for others
● Applicability logic implementation
errors, wording improvements,
additional guidance needs
● Lack of common Performance
Improvement Plan / Corrective Action
Plan on platform
CoC Compliance / Industry Foundational
Expectations
Assess compliance with environmental
laws and basic environmental risk
management practices
● Valid operating and environmental
permit
● Documented policies & management
system
● Impact tracking (Y/N)
● Lack of a single metric to track
Foundational Performance
● Level 1 and Foundational expectations
are not aligned creating confusion
● Verification quality and capacity
● Lack of industry dashboards
● Lack of industry-aligned level of
foundational expectations
● Need rolling cadence (instead of
calendar year) for more up to date
assessment
Impact Measurement / Regulatory
Reporting
Collect environmental impact data
and track progress against specific
reduction targets
● Quantitative impact metrics (GHG,
water…)
● Targets, progress towards targets
● Forced data split between facility
types is challenging for some
facilities
● Need more frequent data for some
facilities
● Verification frequency and
modularity
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Prioritization of Updates for FEM 2024
Performance Management
Prioritization of ● Too many detailed/advanced
updates for FEM 2024 questions for some facilities, lack of
cadence gated L2 and L3 info for others (S1)
● Applicability logic implementation
errors, wording improvements,
additional guidance needs
To be addressed in ● Lack of common Performance
2025 Improvement Plan / Corrective Action
Plan on platform
Session 1: Ensuring we are asking just the right question to the relevant facilities to ensure we provide the necessary
data to their brand partners
Session 2: Improving reliability and timeliness of quantitative performance data tracking in FEM
Session 3: Focus on Verification Program evolution
CoC Compliance / Industry
Foundational Expectations
● Level 1 and Foundational
expectations are not aligned
creating confusion (S1)
● Verification quality and capacity
● Lack of industry dashboards
● Lack of industry-aligned level of
foundational expectations
● Lack of a single metric to track
Foundational Performance
● Need rolling cadence (instead of
calendar year) for more up to
date assessment
In Blue: Consult members
In Orange: Inform members
Impact Measurement / Regulatory
Reporting
● Forced data split between
facility types is challenging for
some facilities (S2)
● Need more frequent data for
some facilities (S2)
● Verification evolution towards
modularity (S3)
● Verification frequency
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Timeline
APR-JUN ‘24 JUL-SEP ‘24 OCT-DEC ‘24 JAN-MAR ‘25

FDM Available Cascale Annual Meeting FEM 24 Launch Begin 2025 Regulatory Data Capture
FDM FEM Integration
for cadence start

FEM 24 update consultation:

- Unlock L2&3
- Facility use case FEM 24 development & testing Post launch support
- L1 / Foundations alignment + score
- Review facility type split
- Verification evolution strategy

Verification scope expansion Level 2 Member consultation + pilot + tech Rolling cadence member
proposal development consultation

Monthly offsite verification

Verification operational efficiency & quality incubator exploration
2024 sprint
PiP / CAP exploration &
development

Identify and convene key industry standard Establish formal governance7

Align Industry on definition of ‘Foundational Performance’
owners & civil society organizations process

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Consultation Process

Session 1
(May 29 & 30, 2024)

FEM 2024
Session 2 All member webinar
development and
(June 4 & 6, 2024) (week of June 17, 2024)
launch

Session 3
(June 11 & 13, 2024)

Non-member feedback
(@Manufacturer Forum
Shanghai: June 28, 2024)
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Inform: updates in flight
Issue
Applicability logic implementation
errors, wording improvements,
additional guidance needs
Lack of industry dashboards
Verification quality and capacity
Lack of industry-aligned level of
foundational expectations
Lack of a single metric to track
Foundational Performance
Solution
Better QA and correction of errors identified,
development of additional guidance
Member Analytics Portal, launched in April
2024
Quality Incubator: Verification Field Guide,
VB Management Systems check,
quantitative metrics verification review,
revamp verifier application process
Growth: account level gap assessment
Cascale led industry engagement and
development of a governance mechanism
to define industry wide foundational
expectations of environmental
management
Development of a Foundational
Performance score. This score is separate
from the Full FEM Scoring methodology, and
associated dashboard will be available on
platform.
Timing and next steps
On-going, to be introduced in FEM 2024 structure file
for Nov 2024 launch
Addition of more FEM views, including foundational
performance, by Sept 2024
Field Guide for roll out during FEM 2023 cadence.
Scale the Management System Check
self-assessment for all VBs by December 2024
Revamp verifier application process by Q2-2025
Identify and convene key industry standard owners &
civil society organizations, by Sept 2024
Align Industry on definition of ‘Foundational
Performance’, by Jan 2025
Establish formal governance process, by March 2025
On-going, to be introduced in FEM 2024 structure file
for Nov 2024 launch
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Tools to be used in Member Consultative Session: Miro

● We will share the specific Miro Board at the beginning of each session, so that you can start
commenting or giving feedback on the discussion points.
● Please refer to the below two short Video Clips, on what Miro is and how you can start using it,
prior to joining the sessions. This will make it easier for those who have not used Miro before.

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Session 3:

Verification
Program Evolution
Agenda
Session Logistics/Overview of verification
01. White board session of understanding verification
02. Understanding modularity: how can Core verification
questions be verified with more efficiency and accuracy?
Break
03. How do methods of verification evolve to expand its
scope to Higg FEM questions in Level 1 & 2
Break
04. How do we improve quantitative metrics verification
with improved quality and higher frequency?
Wrap Up

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 Session 3 is focused on verification - specifically:

What you
1. Understanding modularity: how can Core verification
questions be verified with more efficiency and
accuracy?
2. How do methods of verification evolve to expand its

need to know 3.
scope to Higg FEM questions in Level 1 & 2?
How do we improve quantitative metrics verification:
with improved quality and higher frequency?

ahead of the What do you need to read?

Read through the specific questions and appendix slides

session….
●
we are addressing in this session

● Any of the session pre-reads in order to have a better

understanding of the process

What do you need to do?

● Download the Miro application and understand how to use

it to ensure your comments are captured during the
session
● Register for our consultation webinar on June 20 to hear
the outcome of all sessions

What to bring to the session

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● A solutions mindset and a large cup of coffee!
Verification Overview
Current Conundrum

Perceptions of verification differ vastly within varying stakeholder groups. Higg FEM verification straddles between two
distinct concepts of audit and verification. Feedback from members, verifier bodies, and stakeholders tells us there is a
need to realign expectations and address misconceptions.

The verification program is built following the core principles of:

● Credibility
● Scalability
● Flexibility

We need to keep these in mind as we go through the process of finding solutions to the current challenges being
experienced together.

This consultation session is the start of the evolvement of the program and will continue over the next few months with
further sessions.

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 Higg FEM Verification: Vantage Points
Manufacturers
● Meet a business need
Verifier Body
● Get a third party evaluation of the
● Support factories in
self-assessment and identify areas for
providing more accurate

Pre-reads
improvement
data for Higg FEM
Manufacturer ● Leverage quantitative metrics from the Higg
● Educate factories on
environmental best
FEM for Scope 3 impact measurement and
practices supporting disclosures
Higg FEM
● Grow sustainable
Higg FEM
business
Verification Brand:
● Uses Higg FEM verification to monitor supply
chain compliance with Foundational
Verifier Body Brand parameters (supplier ratings, scorecards, etc.)
● Leverage quantitative metrics from the Higg
FEM for Scope 3 impact measurement and
disclosures
● Utilize verified data points for evaluating
strategic suppliers, and impact improvement
plans

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1: Understanding Modularity: How Can Core Verification
Pre-reads
Questions Be Verified With More Efficiency and Accuracy?
Background:
FEM 2023 verified in 2024 covers questions pertaining to
cadence time frame and present working conditions. The
current verification guidance (tied exclusively to How to Higg
guide), does not provide directions to the verifiers on how to
verify questions of such varying nature.
Verifiers need a clear and consistent guidance in order to verify
questions. Verification program should enable verifiers to
report accurate information.
Proposed Solution:
We recommend that questions for verification be
split in three categories:
Reporting: Includes questions specific to quant
metrics and questions explicitly required to be
answered for the reporting year.
Current: Includes questions specific to present
operating situation on the day(s) of verification
Reporting & Current: Includes questions specific to
permits/licenses, training, management practices
etc., need to be evaluated for consistency in
implementation
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1: Understanding Modularity: How Can Core Verification
Pre-reads
Questions Be Verified With More Efficiency and Accuracy?

Questions for Members:

How would the categorization support brand, verifier and

manufacturers with the information they need for their
purpose by introduction to these categories?

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2: How Do Methods of Verification Evolve to Expand Its
Pre-reads
Scope to Higg Fem Questions in Level 1 & 2?

Background

Higg FEM 4.0 came with an expanded question set. Core

verification pathway was introduced for 2024 in order to
mitigate cost increase, verifier shortage and improve
quality. As a next step, Cascale is working to expand the
scope of verification to Level 1 and 2. Below is a
breakdown of questions in each level for Higg FEM 4.0.
Level 1 and 2 together comprise 82% of primary questions

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2: How Do Methods of Verification Evolve to Expand Its
Pre-reads
Scope to Higg Fem Questions in Level 1 & 2?
Methods:
Currently, all verifications are verified in one visit by the
verifier. This visit would typically involve site walk through,
document review, interview, triangulation of evidence, an
opening and closing meeting. However, Higg FEM has
many components that can be reviewed via different
methods. For example, quantitative metrics may be
reviewed through document review and offsite at a
variable frequency.
Constraints:
Implementing new solutions can come with
constraints. Here are some constraints we
hold while expanding the verification scope:
● Maintaining and improving data
quality
● Modularity (frequency, methods)
● Cost
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2: How Do Methods of Verification Evolve to Expand Its
Pre-reads
Scope to Higg Fem Questions in Level 1 & 2?

Questions for Members:

How do methods of verification evolve to expand its

scope to Higg FEM questions in Level 1 & 2?
● Should all questions be verified annually? If not,
which ones need a different frequency?
● Should all questions be verified offsite? If not, which
ones need to be verified strictly onsite?

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3. How Do We Improve Quantitative Metrics Verification:
Pre-reads
With Improved Quality and Higher Frequency?
Background:
Higg FEM captures different aspects of a facility’s
environmental impacts: foundational expectations,
impact measurement, performance reporting. Impact
measurement (quantitative) metrics are diverse: there
are consumption/generation metrics in Level 1 and
baseline, targets, improvements metrics in Level 2.
Method:
Currently all questions within the Higg FEM
are verified together, while it is understood
that impact measurement (quantitative)
metrics need more document supporting
(e.g. electricity invoices) verification and at
varying time frequencies (e.g. quarterly or
biannual).
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3. How Do We Improve Quantitative Metrics Verification:
Pre-reads
With Improved Quality and Higher Frequency?

Questions for members:

How do we improve quantitative metrics verification:

● With improved quality, and
● Higher frequency?
● While reducing fatigue/redundancy

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Appendix 1:
Verification
Pre-read Material
Pre-reads
Pre-reads
Below is key information pertaining to verification:
● Verification Protocol
● VB and Verifier Requirements Protocol
● Core Verification rationale
● Quality Assurance Manual
● Verification Annual Summary Report 2022
● Higg FEM 4.0 How to Higg Guide

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