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Environment

At PVH, we recognize the fundamental need to address global environmental challenges. We acknowledge that we depend on the earths limited natural resources for our business and that we need to operate in a manner that supports conservation.

Although there have been effective initiatives put into practice by some PVH business units to confront environmental issues, these efforts have been decentralized and ad hoc. Only in the last year have we begun a company-wide effort to identify environmental issues and develop strategies to address them.
PVH is focusing on minimizing our impact on the environment. As a global company, we have organized

our environmental efforts around three key areas: our facilities, products and packaging, and supply chain. In 2008, we began to establish systems to measure our environmental performance in the areas of energy and emissions, waste, water and chemicals. We will expand this effort throughout the company as we continue to collect and report on the environmental metrics. This data will help us to prioritize our efforts and set appropriate targets for reducing our environmental impact. PVH is actively engaging associates, suppliers, business partners, industry peers, environmental organizations and customers to create real, sustainable improvements. We see these steps as the beginning of a long term effort to achieve environmental leadership in our operations.

Facilities
We operated approximately 35 office locations around the world in 2008 including corporate, administrative, sales and sourcing offices and showrooms as well as eight distribution centers and approximately 650 retail stores. We are in the process of creating standard operating procedures to improve practices at all our facilities in order to reduce our impact on the environment. Corporate Offices PVH operates corporate and administrative offices around the world. Our largest offices are the PVH and Calvin Klein headquarters in New York City and administrative offices in New Jersey and Hong Kong. Our Office Services and Human Resources Departments have been working since 2007 with an environmental consulting firm, Great Forest, to assess our domestic corporate and administrative office facilities and recommend environmental improvements to their operations. In each of these locations, we have established local associate action teams to review our practices and develop recommendations on waste, energy, chemicals and water. These action teams meet with landlords, product and service vendors, and other groups to implement these initiatives and collect data for key metrics. As a result of Great Forests facilities assessment, we have implemented several initiatives to maintain environmentally friendly office practices. We now:

Promote stricter recycling practices through improved signage and access to recycling receptacles Reduce bottled water usage through the installation of filtered water coolers and distribution of reusable PVH water bottles to associates Employ recycling practices for all supplies containing hazardous materials, such as light bulbs, ballasts and batteries Install cost-effective energy-efficiency technologies, such as motion sensors to turn off lights when not in use Where possible, install plumbing fixtures that use water more efficiently Buy Green Seal-compliant or similar environmentally friendly office cleaning products Ensure external service providers, such as cleaning and waste disposal services, comply with environmental laws and PVH procedures

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Additional environmentally conscious initiatives undertaken by PVH in 2008 include:

Renovating the 10th floor of our New York City corporate headquarters and applying for LEED certification, a nationally accepted benchmark for the design, construction and operation of high performance green buildings certification is pending for early 2009 Setting up a PVH Cares About the Environment e-mailbox for associates to send and receive environmental updates and recommendations Publishing a periodic newsletter to communicate progress on organizational and associate efforts Establishing regular meetings among our various domestic facilities to share success stories and develop a consistent and coordinated approach to environmental efforts

In 2008, we made progress in establishing strategies to collect data and measure progress at our office facilities. Among the accomplishments reflected in the chart below are the following:

Raised recycling rates dramatically from 29% of total waste being recycled to 76% now being recycled Made 30% recycled content paper the standard for printing and copying Achieved 100% recycling rate for all universal/hazardous waste Reduced energy usage and CO2 emissions Significantly increased the use of Green Seal chemicals for office cleaning and maintenance Reduced the purchase and use of plastic water bottles by nearly 50%

CORPORATE/ADMINISTRATIVE OFFICE METRICS1

Metric Recycling rates (% of total waste that is recycled) Use of recycled paper minimum 30% of content Recycling of hazardous waste Green Seal chemicals as a % of all chemicals used

2007 29%

2008 76%

Metric Energy usage (kWh) CO2 emissions (metric tons)2 Water bottle purchases (units)

2007 7,983,406

2008 7,732,660

Reduction (3.14%)

0%

100%

3,336

3,234

(3.06%)

Not measured 8%

100% 50%

9,897

5,008

(49.4%)

1 Data for Hong Kong is included for recycled paper only 2 Indirect emissions (Scope 2) from the generation of purchased

electricity consumed

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Distribution Centers Our distribution centers have focused on reducing energy use and managing waste. We reuse incoming corrugated cardboard in outgoing shipments where possible and we recycle the remainder. We have begun to tackle energy reduction primarily by replacing expired bulbs with more efficient lighting. We next plan to focus on recycling wooden pallets and implementing the applicable environmental standard operating procedures and guidelines from our corporate offices.

The chart below contains environmental metrics for our distribution centers for 2008 , the first year we started collecting this information. We achieved overall recycling rates of almost 84%, well above our target threshold of 70%. We will be aiming for reductions in the total energy usage and CO 2 emissions moving forward.

DISTRIBUTION CENTERS

Metric Total energy usage (kWh) CO2 emissions (metric tons)1 Recycling rates (% of total waste that is recycled)
1 Indirect

2008 14,377,448 10,441 83.81%

emissions (Scope 2) from the generation of purchased electricity consumed

Stores Our environmental efforts at our retail stores are focused on reducing energy use and waste. We have set guidelines and standards and taken other actions, as follows:

Established proper thermostat settings Established proper lighting procedures Converted to energy-efficient thermostats in more than 90% of the stores, with plans to convert the remaining 10% in the first quarter of 2009 Installed energy-efficient lighting in all new or renovated stores Installed timers on illuminated storefront signs Required the use of energy-efficient bulbs and LEDs in all stores

To reduce waste, we are:


Recycling paper products (primarily corrugated cardboard) in all malls where recycling is available Recycling light bulbs in all stores Putting all training, policy and product documents online, eliminating the use of printed manuals Using soy based inks and sustainable paper stock for all in-store signage.

Other environmental initiatives undertaken in 2008 included the use of green cleaning supplies for our stores and the replacement of water bottles with water filtration systems as contracts expire. In addition, in 2008, we began replacing all regional and district managers vehicles with hybrids as current leases expire. We will be completely converted to hybrid vehicles within two years.

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PVH In-Store Signage

For all of our in-store signage and window displays we use Signmasters, Inc., a printing company with membership in the Forest Stewardship Council (FSC). Signmasters has won accolades from local government with regard to environmentally responsible wastewater disposal and is serious about protecting the environment. Below are some of the environmentally friendly initiatives and practices that go into sign production and recycling for PVH retail stores:

Only soy based ink is used for signage. This is more environmentally friendly than recycled inks, which may contain VOCs (volatile organic compounds) 100% of the paper, if not recycled, is produced from sustainable sources (trees grown to make paper and replenished) 100% of used sign kits are recycled 80% of all silk-screen production chemicals are recycled (used in smaller print runs) Signmasters converted to a digital make ready system, eliminating the need for hundreds of proof sheets previously required for each job All of our packaging is made with 20% to 100% recycled materials and secured for shipping without plastic pressure sensitive tape (allowing it to be more easily recycled)

Products and Packaging


As a provider of clothing, footwear and accessories, we must consider the environmental impacts of the substances used in making and packaging these products. We constantly balance this objective with providing high quality products that consumers will want to buy and wear. Materials We provide the designers of each of our brands with the freedom to select the best materials for their products, given cost, quality and style considerations. However, across all of our brands, we have focused on eliminating harmful substances that negatively effect the environment or product safety. Restricted Substance List Our Restricted Substance List (RSL) creates a minimum standard to ensure that our products do not include materials that are harmful to the environment or cause product safety concerns. PVH has always required its suppliers to adhere to U.S. laws for restricted substances and to the laws of the market in which the products are sold. We expanded these environmental and product safety efforts in 2008 by implementing a more stringent RSL with our apparel suppliers. This list, based on guidelines from the American Apparel and Footwear Association, is stricter than current U.S. regulations. In particular, our new RSL prohibits certain substances, such as formaldehyde, azo dyes and nickel, from use in any of our apparel products. We have organized worldwide vendor conferences to roll out the RSL initiative. We have also required that our suppliers send us a letter confirming that they understand their obligations with respect to these restricted substances. We plan to extend our RSL in 2009 to begin to cover all footwear and accessories. We also intend to develop a testing strategy and procedures, to ensure a compliance monitoring method that is both cost effective and time efficient.

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Timberland EarthKeepers

Under our license agreement with The Timberland Company, we produce a line of apparel called Timberland EarthKeepers that embodies both companies commitment to environmental stewardship and is developed with the idea that appealing, well made apparel can be created with materials that are better for the environment. These products use environmentally preferred materials and manufacturing processes. Through this line, we hope to create consumer awareness of environmental issues related to apparel manufacturing. Timberland EarthKeepers garments must meet The Timberland Companys strict requirements before they can bear the EarthKeepers brand:

Material content must include at least 50% recycled fiber from post-consumer products; at least 50% renewable fiber such as bamboo, hemp, linen, flax or other bast fibers; or at least 50% organic cotton grown without the use of chemical pesticides or fertilizers Products cannot contain any polyvinyl chloride (PVC), which has been linked to several health issues Apparel care instructions must recommend machine wash cold to reduce the use of heat energy for washing Dye must meet Global Organic Textile Standards requirement for all organic products

Packaging One of the largest and most visible areas of environmental impact for us is our product packaging. We sell an estimated 120 million pieces of apparel, 18 million ties and 5 million pairs of shoes annually, with varied packaging. We use approximately 100 million recyclable poly bags each year to protect and showcase these products. We are exploring the use of poly bags made from recycled materials but we have not yet found any that properly display our products. Currently, our Retail, Sportswear and Dress Furnishings Groups are using partial to 100% recycled paper for all paper trim. Our dress shirts are packaged with recycled paper and cardboard packaging and we have reduced the number of pins used as well. In addition to packaging, our products come with trim

such as paper hang tags and inserts. For all business units, paper trim averages approximately 45% recycled content. Bass footwear uses recycled cardboard and tissue paper for all shoe boxes and has removed plastic sticks and bags from most shoe packaging. However, some footwear (delicate materials) require plastic for protection. For these products, we have changed over to recyclable poly bags. We annually utilize approximately 23 million plastic shopping bags in our retail businesses, which are made of 10% recycled content and are also recyclable. We have committed to making all shopping bags biodegradable in 2009.

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Below are 2008 packaging metrics, presenting the total weight of packaging materials utilized by PVH and illustrating our use of recycled, recyclable and biodegradable materials:

Packaging Type Plastic Paper/Cardboard Metal Shoe Boxes Shopping Bags

Volume Apparel (kg) 1,192,600 3,812,000 166,000 -

Volume Neckwear (kg) 21,500 43,400 -

Volume Footwear (kg) 14,000 112,800 94,000 -

Total Volume (kg) 1,228,100 3,968,200 166,000 94,000 424,500

Packaging Type Plastic Packaging Materials

Properties Recycled Recyclable Biodegradable Recycled Recyclable Biodegradable Recycled Recyclable Biodegradable Recycled Recyclable Recycled Recyclable Biodegradable Partial 100%

All Apparel Neckwear and Footwear

Plastic Shopping Bags

Paper/Cardboard

Metal Pins

Shoe Boxes

0%

Reducing Packaging at Bass

In 2007, our Bass outlet retail store division implemented new packaging requirements to eliminate plastic shoe forms, sticks, excess tissue, excess cardboard and foam dividers. Over a one year period, these efforts have saved more than:

1 million square feet of packing cardboard 4 million square feet of tissue paper 9 million cardboard shoe forms 7 million plastic sticks 4 million poly bags 4 million foam dividers

We also have reduced the packaging size for our shoe boxes by at least 12%.

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Supply Chain Environmental Impact


Our supply chain processes significantly impact the environment. Since we do not have direct control over our suppliers, our supply chain presents a challenge as well as an opportunity for us to expand our reach in addressing environmental issues. We believe our environmental strategy must expand beyond our facilities to include specific initiatives undertaken by our suppliers, so that we can jointly reduce the overall environmental impact of our businesses. Manufacturing Our A Shared Commitment Requirements for Suppliers, Contractors and other Business Partners code of conduct includes an Environmental Requirements section. Our efforts to monitor compliance by these business partners have addressed basic environmental issues such as waste water treatment, hazardous chemicals, air quality, recycling and compliance with local environmental laws. In 2008, we identified the need to develop a more comprehensive Environmental Management System (EMS) assessment procedure for the factories in our supply chain. Our research on best practices by leading companies in the industry prompted an important collaboration with one of our licensors, The Timberland Company. Timberlands Environmental Stewardship Team shared their methodology and tools and helped train our teams on effective implementation. Based on the information Timberland shared with us, we revised our assessment tools and metrics, trained our teams and piloted the new assessments and remediation processes in all regions. This upgraded EMS assessment procedure will become part of our factory assessment process during 2009.

New Environmental Assessment Areas for Factories


1. Asbestos 2. PCBs 3. Solid waste 4. Industrial/Process waste water, secondary- and tertiary-level treatment 5. Air emissions 6. Hazardous substances 7. Energy consumption and type, waste (non-hazardous and hazardous),

water consumption and discharge

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Transportation and Distribution Transporting our products to our stores and customers around the world has an impact on the environment through fuel consumption and greenhouse gas emissions. In 2008, we shipped our products approximately 38 million miles. The following chart shows our 2008 product shipment metrics by mode of transportation:

Mode Ocean Air Truck

Total Miles (millions) 20 13 5

Total Units (millions) 112.7 6.9 119.6

Miles per unit 0.18 1.88 0.04

Figures are approximate and do not account for sample shipments and domestic truck moves outside of our domestic hub network

We outsource the vast majority of our distribution to third party transportation providers. We have always worked to consolidate inbound and outbound shipments to reduce environmental impact and cost and to minimize our use of air shipments. Going beyond consolidation will require us to balance environmental considerations with cost and timing considerations. We also must attempt to influence the many providers we use, which is challenging due to the fragmented nature of the U.S. trucking and global ocean freight industries. Recognizing these challenges, we have chosen to collaborate with two larger groups focused on reducing the environmental impacts of the transportation and distribution industry: Clean Cargo Working Group (CCWG), a group of companies facilitated by BSR, and PierPASS.
CCWG is dedicated to integrating environmentally and socially responsible business principles into transportation management through the use of industry-related tools and methodologies. We became a CCWG member in 2009 and will begin to collaborate with industry leaders on transportation related environmental concerns and opportunities. By joining the CCWG, we are now able to leverage our existing relationships with ocean carriers to evaluate their emissions calculation methodologies, as well as

their existing environmental management policies, procedures and systems. We plan to encourage our carriers who are not currently participating in CCWG to do so in 2009. PierPASS is a non-profit organization created by marine terminal operators to reduce congestion and improve air quality in and around the ports of Los Angeles and Long Beach, California. We have worked with PierPASS since its inception in 2005. The program provides incentives to move cargo at night and on weekends in order to reduce truck traffic and pollution during peak daytime traffic hours and to alleviate port congestion. We take advantage of these incentives and encourage our transportation vendors to do the same in order to lessen our environmental impact.

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In addition to collaborating with these partners, we also work with several trucking companies that participate in the U.S. Environmental Protection Agencys SmartWay program. SmartWay is an innovative program that represents environmentally cleaner and more fuel-efficient transportation options. We will continue to support this program and encourage all of our transportation providers to consider membership. Many of our transportation providers who have not yet joined SmartWay have implemented several SmartWay recommendations to improve their environmental performance. When we renew our leases on PVH-operated tractors and trailers in 2009, they will be SmartWay certified. Along with participating in these programs, PVH added a statement to our requests for quotes from transportation providers. The statement explains that, while cost and service levels are of highest importance, we prefer Clean Cargo carriers and SmartWay truckers who are making investments to reduce their environmental impact. The following chart shows the percentage participation by our transportation providers in CCWG and SmartWay in 2008:

Metric % of PVH ocean carriers in CCWG % of PVH truck carriers in SmartWay

2008 Participation 75%

36%

Challenges and Goals


Although we face technical, tactical and strategic challenges, we see the opportunity to make significant progress in reducing our environmental impact. As stated earlier, our high level goals in environment are to: Reduce energy use Reduce waste Minimize water use Use fewer, less damaging chemicals Below is a summary of our specific environmental challenges and goals: Facilities To better understand our facilities environmental impacts, Great Forest will make warehouse and store site visits in 2009 to conduct an environmental assessment and make recommendations on additional environmentally friendly practices and procedures that can be implemented. We will report our conclusions and provide expanded metrics in our 2009 CSR report. Since we lease our offices, distribution facilities and stores, we must work with our landlords and facility managers continue to promote recycling where it is not in place and to ensure recyclable goods are separated in offices and stores where it is available. In addition, we will continue to look for ways to reduce energy use and waste in our facilities.
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Product and Packaging We are focusing on eliminating harmful substances from our product materials, though we have not yet thoroughly examined how to incorporate more sustainable materials into product design. Materially higher costs and limited supply make it difficult to use organic or recycled fibers without substantially increasing prices to consumers. We will continue to explore more sustainable options and to monitor costs, supply, and customer demand to identify options that are appropriate for our brands. We will extend our RSL to begin to cover footwear and accessories in 2009 and we are working to develop a testing strategy to ensure compliance. We will also

devote resources in 2009 to finding suitable substitutions for RSL materials in our packaging. Our first priority will be to eliminate PVC in favor of polyethylene terephthalate (PET). PVC is far less recyclable than other plastics. PET is non-toxic and easier to recycle. Our long term objective is to find ways to reduce the overall volume of packaging. Our shopping bags are currently made in part from recycled materials and are fully recyclable. In 2009, after exhaustion of current inventory, all new shopping bags used in our retail stores will also be biodegradable.

Supply Chain Our challenge in supply chain will be implementing assessments. Implementing this procedure will require awareness building, training and engagement with our suppliers, at both the factory worker and management levels. As new suppliers are brought on and existing suppliers are reevaluated, we will roll out the new environmental requirement procedures and aim to complete assessments for all factories during 2009. We also plan to create a standard approach and guidelines for factories to capture specific metrics in energy and emissions, waste, water and chemicals. We will ask our suppliers to self-report on these metrics so we can develop a better understanding of their performance in these areas and implement targeted improvements. Finally, we will continue to work with our transportation partners and industry collaborators to reduce the environmental impacts of transporting our products. In 2009, we plan to expand our bidding process to include questions about specific practices related to the environment. By highlighting our interest in these practices, we hope that our carriers will seek to improve their practices.

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In addition to our qualitative goals, we have set the following key quantitative goals for environmental performance:

METRIC

2009 GOAL

Offices, Distribution Centers and Stores Recycling rates (% of total waste that is recycled) Recycled paper use and content (%) Recycling hazardous waste Energy usage (kWh) CO2 emissions (metric tons) Green Seal chemicals as a % of all chemicals Plastic water bottle purchasing (units) Use of hybrid vehicles by retail district and regional managers % of new shopping bags to be biodegradable Number of stores that have replaced bottled water with water filtration system Product and Packaging Packaging containing RSL materials Targeted reduction in packaging volume % of recylable packaging materials Volume of packaging upgraded to contain recycled content Supply Chain % of PVH ocean carriers in CCWG % of PVH truck carriers in SmartWay % of factories undergoing EMS assessments Maintain 75% Maintain 36% (subject to the challenges of current economic conditions) 100% for all new factories and those factories to be reevaluated in 2009 Eliminate PVC from all sportswear packaging 5% Reduction Maintain 100% standard 5% Increase Continue to maintain recycling rates at or above the 70% threshold Maintain 100% use of paper with at least 30% recycled content Maintain 100% standard Identify long-term targets and initiatives based on 2009 assessment of distribution centers and stores Identify long-term targets and initiatives based on 2009 assessment of distribution centers and stores Maintain 50% or better 20% reduction As current leases expire, all vehicles will be replaced by hybrids (the conversion to hybrid vehicles will be completed within two years) 100% of new shopping bags Conversion to water filtration systems in 250 stores (Remaining stores to be converted by 2011 )

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