SUSTAINABILITY REPORT
ENVIRONMENT 2017 Consolidated Non-Financial Statement pursuant to Legislative Decree No. 254/2016 AND CLIMATE CHANGE
CUSTOMERS AND PRODUCTS
RESEARCH AND INNOVATION
SUPPLIERS
QUALITY
PEOPLE
COMMUNITY
GOVERNANCE SUSTAINABILITY REPORT 2017 Consolidated Non-Financial Statement pursuant to Legislative Decree No. 254/2016 FINCANTIERI GROUP FINCANTIERI GROUP
We are Fincantieri. Roots in Italy, fruits around the world.
An ecosystem that welcomes shipowners and accompanies them, step by step, from construction through the entire life cycle of their vessel.
We have a plan in mind that we follow every day, implementing our design step by step through growth and continuous improvement.
We want to be a world leader in all sectors that require the best marine solutions, maintaining a central place for our culture and Italian style, increasingly marked out for the scale of our diversification, integration and pioneering spirit.
With people who are worth their weight in gold and whose value we recognize.
This is our idea of the future.
More technological and with higher performance than ever, thanks to continuous innovation.
Responsible, transparent and sustainable for people and the environment.
It is the ocean we face.
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I NDEX
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take orders with low execution risk and higher You mentioned a highly pertinent issue: eco- at infiltration by organized crime. Based on our profit margins. It was a gamble, but one that sustainability. Today the market is focusing more experience of several such agreements signed by worked out well, given the exceptional growth and more on this topic, looking for efficient the Company at a local level, this text is a reductio in demand recorded since 2014 and the trust ships with low fuel consumption and pollutant ad unum of the anti-mafia checking procedures expressed by the market, which has enabled us emissions. What is Fincantieri’s objective, and used for contractors and subcontractors at all to confirm and reinforce the leadership positions what type of commitment does it have to green Fincantieri Group locations. we had gained. technologies? Another result that is truly important for our Specifically in terms of fuel consumption and low Group is the latest supplementary labour Integrating sustainability within the operating emissions, over the last few years we have actively agreement, signed unanimously by all of the methods of the modern company is the examined numerous innovative technologies in labour unions, which has enhanced the value next challenge. What do sustainability and order to offer shipowners a range of options to of the service and effective performance of sustainable growth mean to you and how take into consideration. Today we can evaluate each worker and has established an innovative are these two concepts integrated within the and compare different design solutions through participative model, with worker co-responsibility strategic goals? And more generally, what are the latest new-generation simulators as well as as its core, that guarantees higher levels of the challenges, in your opinion, to making the using tools developed internally based on our efficiency and competitiveness. shipbuilding industry more sustainable? experience. In relation to this, it is very important In our industry commitment means innovation. to highlight another crucial factor, which is Business integrity is a crucial factor for The path we have taken to arrive at today’s Fincantieri’s multi-business approach. We have competitiveness and business continuity, INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER results has been possible thanks to a few always been present in the cruise and military capable of directly influencing the trust of key essential mainstays, one of which is without markets, contributing our know-how and skills stakeholders. This is especially true for large Mr Bono, 2017 was a very important year for the a doubt technological progress. As the only from the mega yachts, offshore, repair and publicly held companies, which play an essential Fincantieri Group. It was a year of considerable shipbuilding group in the world with a presence conversion markets and we have also brought role on world markets as well as in the domestic success that, along with the economic and in every high value-added sector, it is essential in-house our entire production of strategic economy. What does business integrity mean management results, provided confirmation that we continually review and respond to all components, including cabins, electric systems to you, and how does this translate into Group of the objectives in the 2016-2020 Business the specific challenges we encounter in our and much else. This allows us to support our practices? Plan. What was the path taken to reach these business. This means not only offering an customers in reaching their environmental Business integrity, defined as the ability to develop objectives? efficient product that meets our customers’ objectives, which go far beyond strict respect for the business fairly and transparently, is a key part Fincantieri left behind the longest crisis the needs but also responding effectively to international standards. In terms of sustainability, of our identity and the element that our reputation market has ever seen, which hit shipyards all commercial, productive, regulatory and I would like to mention another important is founded upon. over the world, especially in Europe, with the environmental issues that will determine the milestone that we reached in 2017. For the The need to ensure fair and transparent conditions loss of tens of thousands of jobs. We were future scenarios in which we will be operating. first time, one of our production sites received when conducting business affairs and, in general, able to come out stronger, the indisputable We are aware that the prestige and image of Integrated Environmental Authorization (IEA), in all of our activities, protecting the company’s market leader at the high value-added end the company is now measured by its ability to which covers a full range of parameters, including image and reputation, meeting stakeholder of the shipbuilding market, thanks to a combine professionalism and quality with strict limiting of noise pollution and atmospheric expectations, and safeguarding the work of our strategy based on product diversification and respect for the law and expectations regarding emissions. This is a fantastic result for a shipyard, employees, has led Fincantieri to adopt, since internationalization. In fact, in 2017 we laid the the protection of local communities. Fincantieri’s especially as it was obtained by our largest facility, 2002, an Organizational, Management and foundations for the agreement that will give us mission is to become a model of excellence the one in Monfalcone. Control Model under Legislative Decree 231/2001, control of STX France, which will secure us a in environmental protection, and it therefore to prevent unlawful behaviour by administrators, leading role in the process of consolidating the adopts, in its strategic choices and business Coming back to the sustainability strategy of the employees and self-employed contractors. European shipbuilding industry. In the cruise processes at all levels, the environmental Fincantieri Group, what are the main results that The values and principles we believe in are listed ship market, following a strict approach, we sustainability principles of short, medium have been reached? in our Code of Conduct, disseminated to all focused on the development of new generation and long term. This begins with a preventive One goal that we have been working on for levels, which states that respect for the law and platforms, fully supporting the innovation with approach and continues with responsible five years is the National Legality Framework an ethical approach to performing business are significant investment, almost Euro 300 million management of the production chain and Agreement, signed by the Minister of the Interior fundamental to business conduct in Fincantieri. over the last three years. This has prepared us to raising awareness among all those involved. in February 2017, which aims to prevent attempts These values have grown in importance as the
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process of internationalization of our Company companies. Our current order backlog guarantees labour unions at all levels, as well as suppliers that involvement of all workers, within a growing, has evolved, to the point that we considered it full employment for a number of years in all our perform activities in our shipyards. This project continuous and transparent information and necessary to reinforce them through the adoption, shipyards, with the prospect of this horizon being is a true change management plan, as it has communication campaign met by a growing in 2014, of an anti-corruption policy to underscore further extended: in my opinion there can be no promoted deep cultural change, as preparation ability to listen. the Group’s commitment to combating any form better strategy than this. for the implementation of a development strategy. Most of all, the change path undertaken serves of corruption, with a “zero tolerance” approach. Among the activities planned, a central place firstly to increase the sense of belonging and the The adoption of specific company procedures The strategic choice not to transfer production goes to personnel training as a tool for improving spirit of cohesion, strengthening our distinctive along with dedicated training on this issue abroad, but to reinforce links with the local skills and raising standards of health and safety footprint by sharing the values and principles have helped to steer internal conduct towards economy has, on the one hand, increased the in the workplace as well as spreading the culture upon which the Group’s identity is based, and thus principles of integrity and transparency, with a burden associated with contracting, but on of safety throughout the Company. As proof, contributing to an improved work environment. positive influence on the external perception of the other hand it has generated a significant just consider that in 2017 we spent more than In December 2016 an anonymous questionnaire Fincantieri and its reputation. satellite economy, employment and a wealth of 36,500 hours training more than 4,550 people. was distributed to the entire company population, For these reasons, I believe that the preparation knowledge and skills that will remain in the area. The data says we are on the right path: compared hourly workers, salaried employees, management of a dedicated report can be considered the How does Fincantieri guarantee integrity and to 2010, in 2017 we recorded a 74% drop in total and directors. The survey results were shared ideal conclusion to the strategy embarked upon respect for employment regulations and how accidents and a 55% fall in hours of absence during organizational meetings with all employees some time ago, with the aim of highlighting does it intend to conserve the value shared with due to accidents. Over the same time period, which were held at the various company sites, our commitment to environmental, social and its production supply chains? the frequency rate, which relates the number of involving more than 6,500 people. At the end of governance sustainability. The Fincantieri production model, based on accidents to the number of working hours, fell by 2017, the same monitoring process was initiated contracting, is common to the entire European more than 70%. for the change initiatives which had started and to Shipyard activities often indirectly create social shipbuilding industry. This is due to the nature of collect suggestions from personnel with the aim issues, due to phenomena such as immigration the object produced, the ship, which is the most Human and intellectual capital are among the of continuous improvement. and integration. complex and expensive in the world. It involves main assets of your Group. What policies have Nevertheless, shipyards can be seen as a a vast set of activities that are coordinated by been put in place to increase the value of internal laboratory for experiments with inclusion and the shipyard but that require experts to ensure resources and to promote their growth and cohabitation as well as a driver of economic optimal performance. Given this, Fincantieri has development? development and community wellbeing. What always worked with the maximum transparency, I would like to answer by citing an initiative which strategies have Fincantieri adopted to manage observing agreements and laws governing is particularly close to my heart. To restore a social impact? contract work. higher level of knowledge and skills in the field, Our Group has chosen not to transfer its With the National Legality Framework we launched the Training for Quality project in production abroad, and to accomplish this Agreement that I mentioned previously, the flow 2016, which continued into 2017. Its purpose is to we have had to perform a sort of reverse of information is improved, guaranteeing the improve the final quality of our product, checking delocalization, which means using foreign maximum transparency in provisions, contracts that each phase of the shipbuilding process is personnel in our plants. We realize that this and subcontracts and making it possible to check correctly performed. Following the technical mechanism has an impact on the areas where and prevent joint interests with parties directly assessment phase, which involved almost 12,000 we are located, but we cannot disregard the fact or indirectly related to organized crime as well as workers, both internal ones and ones at satellite that some solutions can only come from the local ordinary criminals. companies, and more than 1,500 shipyard administrations and that, above all, a shipyard supervisors dedicated to the production of cruise that works is a source of income for the entire It is well known that Fincantieri is highly ships, we began a significant training program to reference area. committed to protection and safety. What current strengthen technical knowledge and specific skills, In fact, in Italy Fincantieri feeds a network of projects are underway to meet the commitments divided into targeted technical courses, which more than 5,000 small- and medium-sized, made regarding continuous improvements in could be selected using a training Catalogue, also highly specialized enterprises in numerous worker health and safety? for personnel from contractor companies. macro-categories. Just think that each year our In 2011 we launched “Towards Zero Accidents”, Another fundamental and ambitious change purchases of goods and services amount to a cutting-edge project for worker health and management project launched recently is almost € 5 billion, 85% of which is with Italian safety, which involves the Company and the Fincantieri for the Future, based on the active
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THE FINCANTIERI PLANET SHIPYARDS AND DOCKS MAIN SUBSIDIARIES EUROPE EUROPE ASIA ITALY ITALY CHINA Trieste FINCANTIERI S.p.A. (Headquarter) Fincantieri (Shanghai) Trading Monfalcone +7,000 Orizzonte Sistemi Navali CSSC - Fincantieri Ships designed + Marghera € 5 bln 230 Cetena Cruise Industry Development and built Years of history € 113 mln Revenues INDIA Sestri Ponente PRINCIPAL Research, Delfi Genoa Western development and Seastema Fincantieri India shipbuilder innovation Riva Trigoso - Muggiano Isotta Fraschini Motori Vard Electrical Installation Ancona Fincantieri Oil&Gas and Engineering (India) Castellammare di Stabia Seaf BAHRAIN Palermo Marine Interiors FMSNA NORWAY Fincantieri SI UAE Aukra Fincantieri Infrastructure Etihad Ship Building Brattvaag Issel Nord QATAR Brevik NORWAY Fincantieri Langsten Vard Group (Headquarter) Services Middle East Søviknes Vard Design SINGAPORE ROMANIA Vard Piping Fincantieri Singapore R.O. Braila Vard Electro Vard Holdings Tulcea Vard Accomodation Vard Shipholdings Singapore Seaonics JAPAN ASIA PRINCIPALITY OF MONACO FMSNA YK + VIETNAM 550,000 Camper&Nicholsons International Hours of training Vung Tau provided SWEDEN AMERICAS +19,500 Fincantieri Sweden USA Employees POLAND Group Holdings AMERICAS 57% other countries - 43% Italy Seaonics Polska Fincantieri Marine USA + 165% Systems North America Marinette Stock growth € 26.2 bln Sturgeon Bay 2017 Total backlog Fincantieri Services USA Green Bay Fincantieri USA +250,000tCO e BRAZIL 2 Vard Marine US GHG emissions st Suape 20 1 106 CANADA Shipyards - Total Player in Vessels in 4 Vard Marine 2 diversification area of 5.4km order book Continents BRAZIL and innovation +5,000 Suppliers in Italy Fincantieri do Brasil alone Partecipacoes
OCEANIA AUSTRALIA Fincantieri Australia
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SIGNIFICANT EVENTS IN 2017 SIGNIFICANT EVENTS IN FIRST MONTHS OF 2018 FEBRUARY • Fincantieri and Ferretti Group signed a cooperation agreement with the goal of developing commercial and industrial synergies. • Fincantieri, China State Shipbuilding Corporation (CSSC) and Carnival Corporation & plc signed a binding Memorandum of Agreement (MoA) for the construction of two cruise ships, with an option for four more for the Chinese market. • The Minister of the Interior, Marco Minniti, and the Chairman of Fincantieri, Giampiero Massolo, signed the National Legality Framework Agreement. JANUARY MARCH • Signed memorandum of collaboration with the Closing of the voluntary general offer for shares in VARD. Friuli-Venezia Giulia Region and the union organization aimed at constructing a series of initiatives to promote work placements MAY and stimulate local employment, especially among young people. • Signature of the share purchase agreement to acquire 66.66% of • Agreement with the City of Monfalcone for work-study projects. the capital of STX France from its current shareholder, STX Europe AS. • Activation of the “Food Bank” project and I.F.M. 2018 • Signature of the Memorandum of Understanding with ENI to • Start of “Together in Safety” for suppliers. collaborate in the Research & Development of energy systems and, specifically, in the supply chain to increase natural gas usage. FEBRUARY • Signature of a letter of intent with CSSC and the District of • Signed agreement with the French Government for the Baoshan in Shanghai aimed at the creation of an industrial park, purchase of 50% (+1% on loan) of STX France capital shares. mainly for cruise ship and shipbuilding activities.
JULY • Fincantieri and GE Power reached an important milestone in the development of an innovative system of emissions control to reduce 2017 pollution in the maritime sector. • Signature of a strategic collaboration agreement for research and innovation with Mapei.
SEPTEMBER • Cooperation agreement between the Italian and French governments with the aim of creating a global leader in civil and military shipbuilding and defining the shareholder structure of STX France, which requires the participation of both Naval Group and Fincantieri.
NOVEMBER • Proposal for delisting of the subsidiary VARD from the Singapore stock market. • Conclusion of the program for the purchase of own shares for 4,706,890 ordinary shares, equal to about 0.28% of the share capital, announced on 25 October 2017, implementing the decision taken at the Shareholders’ Meeting on 19 May 2017.
DECEMBER • Presented bid to the Government of Canada for the construction of fifteen naval vessels by Naval Group and Fincantieri. • Received ISO/IEC 27001:2013 and ISO 9001:2015 certifications for the Quality Management Systems for Information Security from RINA Services. Fincantieri is one of the first shipbuilding companies to obtain these certifications.
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T HE FINCANTIERI GROUP
OUR HISTORY: THE BOND WITH THE SEA
GROUP OVERVIEW
VISION, MISSION AND VALUES
BUSINESS MODEL
ITALIAN REGIONAL TECHNOLOGICAL DISTRICTS
MEMBERSHIPS AND PARTICIPATION
CREATION AND DISTRIBUTION OF ECONOMIC VALUE
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A global Group with a leading role The Group, which has its headquarters in in all the high value-added maritime Trieste, has built more than 7,000 vessels and world markets in its over 230 years of history. With 19,545 employees, including more than 8,300 in Italy, and 20 shipyards spanning 4 continents, Quoted on the Milan Stock Exchange, Fincantieri is now the leading Western Fincantieri is one of the world’s largest shipbuilder. Its customers include the major shipbuilding groups and number one in terms cruise operators, the Italian and US Navy, of diversification and innovation. It is leader as well as several foreign Navies, and it is in cruise ship design and construction and a a partner of some of the main European reference player in all high-tech shipbuilding defence companies within supranational industry sectors, from naval to offshore programs. vessels, highly complex special vessels and ferries to mega yachts, as well as in ship Fincantieri bases its technological and repairs and conversions, the production of operational excellence on specific strengths: systems and components and after-sales services.
System Technological integrator leadership capabilities
OUR STRENGTHS Business Tailor made diversification products
Wide portfolio of Flexible & global clients & products production network
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OUR HISTORY: THE BOND WITH THE SEA Vespucci, the educational ship of the Italian of constant growth and development, the the courage to change combined with tradition, Naval Academy, and the trans-Atlantic Rex, Group’s calling-card continues to be, as it was experience and innovation. The Fincantieri Group has produced legendary winner of the Blue Riband for the fastest Atlantic two centuries ago, an in-depth knowledge of ships in its shipyards, for example the Amerigo crossing by a passenger ship. Within this path the sea, a natural bond that defines it, along with
The Group moves forward with a strategy of further diversification and internationalization: 2008 • At the end of 2008 it acquires the Manitowoc Marine Group in the United States, now 2013 known as Fincantieri Marine Group, entering the United States Defence market. The top modern Italian shipbuilder begins its • Etihad Ship Building LLC is founded, a joint venture for the construction and repair of 1780 activities in Castellammare di Stabia. ships for the Navies in the Middle East. • In 2009 Seastema S.p.A. is founded, with ABB, serving the Automation Industry. • In 2011 an operating unit dedicated to logistic and after-sales support is established to meet the growing demand for these services. • The mega yachts business unit delivers the first 134 metre mega yacht, winner of the 2012 World Superyacht Award. Fincantieri is established as • January 2013 purchase of the Norwegian Group VARD, publicly traded on the Singapore a finance company to control 1959 Stock Market, among the world-leaders in the construction of top-tier offshore support the main Italian shipyards. vessels.
Fincantieri is converted into 1984 2014 The Group is traded in the Italian Stock Market and the company Marine Interiors is founded, an operating company. a company specialized in the design, refitting, and delivery of “turnkey” cabins.
The Company enters the cruise ship THE The following are founded: business and delivers its first vessel, the 2015 Crown Princess, to the Carnival Group. 1990'S • Fincantieri SI, a company that designs, produces, and supplies innovative industrial electric, electronic and electromechanical integrated systems. • Clear recovery of operating and economic • Fincantieri (Shanghai) Trading Co. Ltd., 2016 performance in line with the objectives of the Chinese branch, with headquarters in Shanghai, 2016-2020 Business Plan. The Destriero sets the record, which stands today, for the to ensure the Group’s presence • Signature of a major agreement with China fastest Atlantic Ocean crossing without refuelling. 1992 in the Chinese market. State Shipbuilding Corporation (CSSC) for the formation of a joint venture aimed at developing the Chinese cruise market. • Establishment of Fincantieri Australia, with headquarters in Canberra, to manage all • Signature of the share purchase agreement to acquire 50% (+1% on loan) of activities related to the tender to win the maxi- The Group strengthens its strategy for growth, expanding its business boundary into 2017 the capital of STX France, whose closure is planned for 2018. order from the Royal Australian Navy. 2000 three new business areas: 2018 • Signature of Memorandum of Agreement with CSSC and Carnival Corporation • Endorsement of the CDP (Carbon Disclosure 2007 • Mega Yachts, creating the Fincantieri Yachts product line, focused on the design and for the construction of two cruise ships, with an option for Project). construction of large luxury yachts. four more for the Chinese market. • Definition with the main trade unions of • Ship repairs and conversion, through the expansion of its vessel transformation and • Acquisition of more shares in the VARD Group with an increase from 55.63% to the terms for renewing the supplementary conversion business. 79.74% as of 31st December, 2017. labour agreement applying to all employees of • Systems and components with the aim of strengthening the business by acting as • Fincantieri and Ferretti Group sign a cooperation agreement to develop FINCANTIERI S.p.A. and some subsidiaries. a “systems integrator” for the design and construction of turnkey solutions, offering commercial and industrial synergies. products to customers in both the naval and industrial sectors. • Signature of National Legality Framework Agreement. • Various R&D agreements are signed with ENI (Energy Systems), GE Power (Emissions Reduction), and Mapei (Chemical Products). • ISO/IEC 27001:2013 and ISO 9001:2015 certifications received from RINA Services.
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GROUP OVERVIEW customer requirements in a timely manner. Today Fincantieri has 72 subsidiaries, 14 of which are Fincantieri Marine Systems North America Inc., the Group consists of a number of companies with Italian and 58 of which are foreign. The main ones Isotta Fraschini Motori S.p.A., Marine Interiors S.p.A. Over the years, Fincantieri’s organization has headquarters in Italy and around the world, and are: VARD, Group with operational headquarters and CETENA S.p.A. Below is a diagram which continuously evolved to adapt the Group’s follows an integrated production model, designed in Norway, publicly traded on the Singapore highlights the macro-organization of the Group structure to its strategies and to respond to to achieve excellence. Stock Market, Fincantieri Marine Group LLC, and the main companies by business area.
SHIPBUILDING OFFSHORE EQUIPMENT, SYSTEMS AND SERVICES OTHER SEGMENTS BUSINESS AREAS
Cruise ships Ferries Naval Vessels Mega Yachts Offshore Systems and Components Services Contemporay Cruise ferry Aircraft Carriers Mega yachts > 70 m Drilling units Cabins Ship repairs Premium Ro-Pax Destroyers Offshore support vessels Public areas Refitting Upper Premium Dual fuel ferries Frigates (AHTS-PSV-OSCV) Electrical, electronic and Refurbishment Luxury Corvettes Special Vessels electromechanical integrated Conversions Exploration/Niche Patrol vessels Aquaculture systems Product lifecycle management PRODUCT PORTFOLIO Amphibious ships Offshore Wind Automation systems • Integrated logistic support Logistic support ships Expedition cruise vessels Entertainment systems • In-service support Multirole and Research Vessels Stabilization, propulsion, • Refitting Special Vessels positioning and power generation • Conversions Submarines systems Training and assistance Steam turbines Steel structure for large scale projects
FINCANTIERI S.p.A. Fincantieri Marine Group Holdings Inc. FINCANTIERI S.p.A. FINCANTIERI S.p.A. FINCANTIERI S.p.A. FINCANTIERI S.p.A. • Monfalcone FMG LLC Fincantieri Oil&Gas S.p.A. • Riva Trigoso • Arsenale Triestino San Marco • Marghera • Sturgeon Bay VARD Group AS Seastema S.P.A. • Bacino di Genova • Sestri Ponente Marinette Marine Corporation LLC • Aukra • Langsten Seaf S.p.A. • Cantiere Integrato Navale Riva Trigoso e Muggiano • Marinette • Brattvaag • Brevik Isotta Fraschini Motori S.p.A. Delfi S.r.l. • Ancona ACE Marine LLC • Søviknes • Bari Issel Nord S.r.l. • Castellammare di Stabia • Green Bay Vard Tulcea SA Fincantieri SI S.P.A. FMSNA Inc. • Palermo Fincantieri India Pte Ltd. • Tulcea Marine Interiors S.p.A. Fincantieri Services Middle East LLC Bacini Palermo S.p.A. Fincantieri do Brasil Partecipacões SA Vard Braila SA Fincantieri Infrastructure S.P.A. Fincantieri Services USA LLC Gestione Bacini La Spezia S.p.A. Fincantieri USA Inc. • Braila Fincantieri Sweden AB Fincantieri Holding BV Fincantieri Australia PTY LTD. Vard Promar SA Unifer Navale S.r.l. CETENA S.p.A. Fincantieri (Shanghai) Trading Co. Ltd. • Suape Camper & Nicholsons International SA Vard Vung Tau Ltd.
MAIN SUBSIDIARIES / ASSOCIATES / JOINT VENTURES MAIN SUBSIDIARIES / ASSOCIATES Etihad Ship Building LLC. • Vung Tau Orizzonte Sistemi Navali S.p.A. Vard Electro AS CSSC - Fincantieri Cruise Industry Development Ltd. Vard Design AS Vard Piping AS Vard Accommodations AS Vard Marine Inc. Seaonics AS
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VISION, MISSION AND VALUES The Fincantieri value system is a large Each value is represented by an icon and design, which includes a global network of a distinguishing phrase to make the values The Vision, Mission and Values of connections of skills and knowledge, at sea expressed more familiar and to create a high Fincantieri are the supporting pillars of the and on land. The values are fundamental degree of awareness. Group culture. guidelines, cornerstones of the business, recognized and adopted by all who work in Starting from the concept that the values of a the Group, in individual, corporate and team company represent the base for its business, VISION MISSION actions. They mark out a shared course into its mission and its objectives, the square was
We aspire to become world leaders in all sectors Technological development and continuous an increasingly sustainable, technological and chosen as the key visual, a base which must be requiring cutting-edge marine solutions, and to improvement are the goals that we have set for high performance future. solid and concrete, associated with the claim: stand out for diversification and pioneering work. ourselves, and we are determined to pursue them. During 2017, following an important change “We have framed our idea of the future“. The Sea Ahead: all those who work for the Our every action, project, initiative or decision management project called Fincantieri for is based on principles and guidelines that are Fincantieri Group steer for this course: talented the Future arising from the need to address men and women working responsibly to implemented across the Group: strict observance the competitive challenges the Company help develop our idea of a future increasingly of the law, labour protection and protection of characterized by technology, performance and the environment, safeguarding the interests of will face in the medium and long term, the sustainability. our shareholders, employees, clients, trade and Fincantieri Group values have been redefined. financial partners, local communities and groups, The first step in this project was the creating value for every stakeholder. distribution of a questionnaire to the Italian workforce to obtain opinions, expectations and suggestions from employees, evaluate VALUES their attitude to change, willingness to get involved, and to identify all potential barriers PEOPLE that need to be removed to ensure the Everything we do focuses on enabling success of the Company. The questionnaire the grouth, enhancement and training of people, based on the daily attention also included an open question where that we pay to the quality of our work responders were asked what they felt the and our relations with others. INNOVATION Group values were; the most common words We aim at continuously were used to create a new Charter of Values improving our products and working methods through consisting of five principles. technological innovation. One of the four “change work areas” identified following processing of the results of the FINCANTIERI questionnaire is focused on the consolidation SAFETY and communication of the values and We ensure high levels principles on which the Group’s identity will be of occupational safety and health. based and on which the new organizational culture will be founded to support the strategic objectives. The values were officially presented to all employees during the Town Hall Meetings held at all Italian headquarters CUSTOMERS FOCUS and shipyards starting in April 2017; in October We meet costumer requirements INTEGRITY 2017 a far-reaching communications campaign and we rigorously We take responsability for our actions honor our commitments. and we put great care into our work, was started with the objective of making the adhering to strict principles of ethics, loyalty and professional fairness. Charter of Values a constant, clear presence in all offices and bases to guide each individual in performing their work.
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BUSINESS MODEL The main processes into which the Group value (iv) procurement; (v) production; (vi) guarantee chain is divided, described below and illustrated in and after sales; (vii) financing. The products made by the Group feature the following diagram, are: (i) contract acquisition; a high level of personalization and, in (ii) project management; (iii) design; many cases, are prototypes with cutting- edge technological solutions. As such, BUSINESS MODEL: SUMMARY DIAGRAM Support processes Core processes
they require significant efforts in terms of Timeline not Pre-contract stage Post-contract stage to scale(1) (3-4) Contract (10-12) First sheet cut (10-13) Launch (8-11) Delivery (12-24) design, procurement, production, planning Contract Tender / negotiations and order management. As part of its acquisition activities, the Group acts as a systems Project Order management Management Project management integrator, usually acting as the prime/ Basic design general contractor, managing the project for Functional design vessel construction as a whole and taking on Design 3D Model responsibility for this. Development design Typically, while there are differences due Management of changes to the strategic business area and product type, for each order the Group directly Procurement Procurement develops project management, design, Sheet cutting Pipe construction hull procurement and manufacture, while Pre-fabrication Pre-outfitting its role mainly involves integration and Production coordination of a qualified network of expert Pre-assembly suppliers for the preparation of systems, Assembly Outfitting Guarantee and Guarantee and accommodation and, for military vessels, after sales after sales weapons systems. The need for continuous ECA commitment (2) Support for export credit negotiation Documentation for draw down research into methods to reduce costs Financing Financing of working capital and development and construction times for vessel orders has led the Group to (1) Indicative timing for the Cruise Ship market. (2) Export Credit Agency commitment, often required as a condition for the validity of the vessel contract. develop a business model characterized by high flexibility and integration of the main business processes as well as cutting-edge 1. Contract acquisition process Given the highly complex nature of the technological solutions. In terms of business The acquisition of a new contract is usually the product, with significant technical content and model the Group has adopted a make or result of a tender held by a shipowner which customization, the order acquisition process buy strategy for each step of development is participated in by numerous companies, requires the involvement of a multi-functional and construction of the vessel order, with although there are some situations in which work team, coordinated by an Offer Preparation the objective of keeping core skills and high the contract can be acquired through direct Manager (OPM) who typically belongs to value-added activities within the Group negotiation where projects have significant the marketing and sales department, and and outsourcing to qualified suppliers common elements with orders previously built. consists of representatives from the quotation specialist activities that are low value- Participation in the tender occurs through department and the main functions that will added or non-essential. Generally, the Group direct involvement of the shipowner or be involved in the construction of the order, contracts during all stages of development through market representatives. For military such as design, purchasing, production, project and construction of the order, especially vessels, acquisition can occur through direct management, management planning and for design and production areas, also to negotiations with the governing body, control, finance and naval contracts. A critical ensure effective and efficient management government agreements, or tenders held by success factor at this stage is the effectiveness of fluctuations in the order backlog and the government authority (typically in countries of the inter-departmental coordination in a optimize saturation of the Group workforce. without a relevant national player). multi-offer context, with the departments
24 25 FINCANTIERI GROUP FINCANTIERI GROUP
involved in parallel also in the development of of the contract through to delivery of the CONTEXT: DESIGN PROCESS vessels and throughout the guarantee and acquired orders, and with contract acquisition Simplified schematic of the process Main outputs
times that vary greatly, characterized by after sales period. Contract / Zero Point Design Order frequent periods of standstill and sudden • Vessel specification Update of basic design elements: • Basic elements for estimate/contract accelerations. In this context, it is crucial for the 3. Design process Basic design • General Plans (GAP) 1 (vessel) (Deadweight, GAP) profitability of the project that the activities are The design process is divided into a number • Deadweight (DWT) • Technical feasibility studies planned efficiently and that there is a timely of steps: • Functional/basic schematics (2D) assessment of the risks related to the order. Functional design Functional • Dimensioning/financial statements 2 (systems/utilities) Update • basic design; (calculations) • Technical specifications 2. Project management process • functional design; Pre- Design coordination Coordination With order acquisition, following conclusion • development design; “Paths • Location of objects in space (3D Overview” Coordination 3 (volumes/rooms) Update model) of the contract, there is a handover between • technical assistance to production; the offer preparation manager and the project • management of changes. Executive design Ex. • Construction/assembly drawings for manager who will manage the following 4 (volumes/rooms) Upadate production (2D, extraction from model) stages of development and construction. The various phases of the design process The involvement of the project manager, are highly integrated and interconnected, Technical assistance • Assistance to production or more generally speaking the project and linked with the processes of order 5 to production • Lifting, weights, etc. management department for the specific acquisition, procurement and production. operating area, during the order acquisition For the development of the various design • Technical documentation updates Management of changes (drafts/new document versions) phase encourages the direct assumption of phases, systematic Concurrent Engineering 6 responsibility by the project manager who and Carry Over approaches are applied, with follows the order during definition of the the support of a “technological database” which is the technical custodian of all design quotation. Acquired orders are therefore of the contribution of third party suppliers and monitor the times - and, if necessary, solutions and standard components for the managed, within the various operating in relation to the overall value of the project. adopt corrective actions - for the supply. The development of projects. divisions, by a project management Suppliers work in close contact with the Group purchasing development function instead deals team directed by a project manager and for the construction of vessels, often working with the marketing processes of purchasing, consisting of resources with specific 4. Procurement process in the same production locations in which the selecting suppliers and acquiring cross-cutting A large part of the overall value of each order professional responsibilities ranging from vessel is being built. Given the high percentage services and raw materials or components depends on the materials, parts, components planning and control of the order to risk of project value related to third party supplies, common to different areas. and turnkey systems supplied by third parties. management, from contract management the purchasing process is critical for each vessel The Group actively manages its make-or-buy to monitoring of project compliance and construction project and is therefore managed procurement strategies and therefore the size progress. Direct management of the internally by units in the operating divisions or development and construction activities relevant units in other Group companies and the for the order is entrusted, based on area central coordination units. Typically, operational of responsibility, to the design, purchasing managers oversee the purchasing processes and production department. The latter is represented by the shipyard (or shipyards) where the order will be built. The project manager is responsible for the outcome of the order in terms of timing, costs and quality and is the Group contact for the shipowner. Project managers, with their teams, are responsible, therefore, for the overall economic progress of a project over the entire life of the order, from signature
26 27 FINCANTIERI GROUP FINCANTIERI GROUP
5. Production process 6. Guarantee and after sales process export credit, the development of resources Delivery of the vessel generally signals the and acquisition of new talents, the operation start of a guarantee and after sales phase, and updating of information technology 1 basically related to the commitments made systems, the management of disputes with to the shipowner during contract acquisition, customers or suppliers, etc. The centralization The “Sheet cutting” date formalizes the start of the production activities through the activities for the treatment of the ferrous materials that the hull will be made of, cutting of sheets and bar stock, during which the Group guarantees the of these services in the corporate core is SHEET bending of surfaces, etc. The machine shop responsible for this machining has a significant degree CUTTING of automation and mostly internal labour, mainly dedicated to machine operation. scheduling and management of the operations aimed at exploiting synergies between the 2 necessary to eliminate any problems various operating divisions due to greater During the initial phases of vessel construction, in parallel with construction of the hull, pipe encountered during the contract period, standardization/harmonization of the construction is also managed, performed partly within Fincantieri and partly by expert external PIPE suppliers. Pipes made in this manner are made available for both starting from the delivery of the vessel through processes and the tools employed, from the pre-outfitting activities, with assembly on blocks/sections on the ground, and for the later CONSTRUCTION a predefined period, supplying the necessary the most simple transfer of knowledge and stages of outfitting in dry dock or on the dock. know-how and appropriate co-ordination of practice to better use of resources in the face the suppliers. of fluctuating workloads. 3 During the pre-fabrication phase, the iron materials are suitably treated, cut and shaped to the sizes and shapes required, then consolidated, based on the assembly level, in sub-assemblies and blocks. This stage After delivery of military vessels, there are PRE features automated activities, mostly related to the manufacture of “flat blocks” (central parts of the vessel), frequently after-sales logistics service activities and manual activities, mostly related to the manufacture of “curved blocks” (bow, stern and lower portions of FABRICATION the vessel) which require, to guarantee effective and efficient management of the variations in order backlog, that fall within the set of activities related systematic contracting, mostly related to the lower value-added activities, under the strict supervision of Fincantieri. to the supply of spare parts and customer 4 service (such as technical interventions following customer calls, planned maintenance The pre-outfitting phase is overseen by the same machine shops that later perform the outfitting PRE or machine shop repairs). phase. It involves the start of utilities systems outfitting and painting on blocks and sections, in parallel with the pre-fabrication and pre-assembly phase, and is continued on the completed vessel in OUTFITTING dry dock in parallel with the assembly phase. 5 7. Financing process The main processes into which the Group’s
PRE During pre-assembly the blocks are assembled into sections or loading units (units that are positioned in the dry value chain is divided are flanked by a series ASSEMBLY dock). During this phase, also managed under contracts supervised by Fincantieri, the blocks/sections are pre- of support processes that contribute to the outfitted on the ground through progressive assembly of the outfitting materials and are then painted. efficient management of the order. The ability of the Group to manage complex projects is 6 based on an result-oriented organization, with The sections manufactured during the pre-assembly phase are then made available for positioning in dry dock for the following assembly phase of the vessel using lifting equipment. The layout date is the date on which the first section of the vessel is positioned in the dry central functions that control and support dock. The launch date is the date on which the assembled vessel leaves the dry dock (or is slid onto the staging area or transported to operating division activities according to the apron) and floated in safety to the dock for the final completion phase. Between the layout date and the launch date, the sections are ASSEMBLY progressively assembled to make up the complete hull of the vessel. their respective areas of skill (management These activities are once again performed under contract, with supervision by Fincantieri. In parallel with the welding of the various sections, the pre-outfitting of the systems and machines continues, with connection of the system lines (such as pipes, conduits, etc.) planning and control, administration, treasury previously assembled on different sections. Also in parallel, work is carried out to complete the painting and insulation, outfitting related and corporate finance, information technology, to the operation of the ship’s platform (motor equipment ready, alignment of shafts, etc.) is carried out and payload outfitting (cabin furnishings, public areas, services, weapons systems, etc.) is started. human resources, legal, operations, quality, coordination of R&D initiatives, development of industrial systems, industrial methods and After the launch date, outfitting of the floating vessel starts in the dock; this phase includes outfitting of the minor auditing). systems and payload, i.e. the systems, equipment and fittings which serve for the vessel’s use. During all the activities 7 to execute the order, in particular in the period between the launch and vessel handover, there are formal deliveries of These functions, located centrally within the blocks, sections, areas, systems, etc. to the naval registers, the Flag Authority and the shipowner. These deliveries certify product acceptance at various levels. The performance checks on the ship are mostly carried out during the navigation corporate centre, play a role in the overall tests, which are carried out a few months before delivery with the execution of the tests required by the Registers and governance of the Group’s business as well OUTFITTING the shipowner. The sea tests can only be carried out after having carried out the preparatory tests in the dock of the on-board plant/systems, the pre-tests of their operation and after having checked the safety conditions required by as providing shared services to the various the Registers and the Maritime Authority. The end of the production phase is sanctioned on delivery of the vessel to the shipowner by the signature of the Ship Acceptance Report (protocol of delivery) which represents the quantitative and operating divisions. These support services qualitative result of all the construction and testing phases. This formal process is preceded by the issue of specific ensure, in some cases, key activities for documents/certificates by the relevant entities and authorities (RINA, Registers, etc.). winning contracts and the resulting margins, for example the concession of financing for
28 29 FINCANTIERI GROUP FINCANTIERI GROUP
ITALIAN REGIONAL TECHNOLOGICAL DISTRICTS including those to China and the United States. and training, as well as the communication of During 2017, the Transport NTC has held round results, the stimulus for innovative activities, Fincantieri makes use of a network of table discussions on cross-industry topics the exchange of knowledge and experience, subsidiaries, joint ventures, supply chains, emerging from previous work to promote technology transfer, publishing on the internet and industrial and technological districts of the presentation of projects in response to and communication of information between excellence in the cruise ship, ferry, and military the call for projects for the Italian Operational companies and research organizations, and and offshore vessel markets, which contribute Programme (IOP) of the MIUR for industrial internationalization, to promote the growth of to maintaining its competitive leadership in research projects within the terms of reference the intangible value of the Friuli Venezia Giulia terms of skills and know-how. Fincantieri is of the National Technology Clusters. Region maritime technology system. an example of Made in Italy around the world • The Liguria District for Marine Technology with a strong export vocation. It represents a Blue Italian Growth National (DLTM), focused on the development of new valid driving force for a large range of Italian Technology Cluster solutions for vessel systems for naval and Small to Medium-sized Enterprises (SME) scientific research and industry. During August, the proposal to the MIUR for recreational shipyards, for vessel systems for which would not otherwise be able to access The purpose of the cluster is to mobilise the the foundation of the Italian Technology Cluster defence and security, and for monitoring, foreign markets due to size limitations, thus industrial system, research system and Public Blue Italian Growth (BIG) was accepted. The reclamation and safety of the marine supporting a number of supply chains and Administration to jointly create extensive more than 130 advocates took action to put in environment. technological districts of excellence. national partnerships that address shared place the Action Plan prepared and the NTC BIG • The Liguria Technology District for Integrated priorities, as well as to develop strategies for was formally established, defining a transition Intelligent Systems (SIIT), created for the research, development and training of human period for its activation, which ends at the end development of virtual reality, simulation and resources, and the relative implementation of the year. NTC BIG generates the opportunity support tools for the automation of processes plans and impact on the economic system, in for innovative technology development for the and logistics. line with the need for innovation and increased marine and maritime industrial system of the • The Polymeric and Composite Materials and competitiveness emerging from companies country. Specifically, it will conduct consultation Structures Engineering District (IMAST) in the 20-30% 70-80% OUTFITTING (Suppliers) PLATFORM in the country. 2017 saw a continuation of the and coordinate with the main players in the Campania region, founded for the development (Fincantieri) activities of the "Trasporti Italia 2020" NTC and public and private research system on the topic of cutting-edge skills in innovative materials the formation of the Blue Italian Growth NTC. of Blue Italian Growth, also in cooperation with for the aerospace, maritime, automotive, bio- the responsible Ministries. This approach is in medical, polymer electronics and construction Trasporti Italia 2020 National complete harmony with the objectives of the industries. Especially in Italy, Fincantieri feeds and invests Technology Cluster United Nations Agenda 2030 for sustainable • Sicily Technology Distric for Naval Transport in regional technological districts, acting as a Fincantieri participates in the maritime Working development, specifically with Objective (NAVTEC), focused on improving the skills of motor for the economic growth of the area and Group of the Trasporti Italia 2020 NTC, one of 14 (SDG 14) “Conserve and sustainably use the network of strategic suppliers within the field the entire national economic system. Its role as a the eight Italian Technology Clusters initiated the oceans, seas and marine resources for of maritime repair and conversion in Sicily. system integrator allows, in fact, for the effective by the Minister of Education, Universities and sustainable development”. and efficient integration of suppliers within the Research (MIUR) in 2012. The objective of the districts is to integrate production cycle; the creation of long-lasting The objective of Italy "Trasporti Italia 2020" Regional Setting: associations, committees, the skills present in the research system and relationships allows dedicated technological is to create synergy between the various programs and projects the business world, and to allow suppliers, areas to be consolidated, with a consequent supply chains and to identify future research At a regional level, the cluster policy has universities and research centres to interact reduction in costs, increase in quality and, above and innovation trajectories for the surface strengthened the roles of the districts; in close contact with the Group for the all, reduction in risk. In 2016, the Italian Ministry transportation industry. Fincantieri has Fincantieri works with five technology districts development of technological solutions. of Education, Universities and Research (MIUR) implemented its role of reference point for located in the areas of its shipyards: The graph below shows an example of the completed the definition of its "clusters policy", the central Administration of the country by model of cooperation that can be developed establishing the National Technology Clusters intervening to support the Government in its • The Friuli Venezia Giulia Maritime Technology within the Italian Technology Clusters or the (NTC) as the key reference bodies in their presentation of Italian innovations during the Cluster (MareTC FVG), which has the objective Italian Regional Technology Districts. respective areas of expertise and strengthening Transport G7, which was held in Cagliari in of promoting and developing scientific and their function of soft-governance between June 2017 and on various diplomatic missions, applied research, technological development
30 31 FINCANTIERI GROUP FINCANTIERI GROUP
MEMBERSHIPS AND PARTICIPATION stimulating, along with the other associates, effective, systematic action in the areas of To support the development of its business, research and development and promotion of Fincantieri participates in the governance of the industry’s interests. Subsidiaries Regional Technology Clusters National Technology Districts various national and international associations,
MARINE Tech. Cluster ASSOCIATIONS THAT FINCANTIERI PARTICIPATES IN SEASTEMA INTERIORS FINCANTIERI SI Trasporti Italia Blue Italian in FVG 2020 NTC Growth NTC Tech. Cluster in Liguria
ISOTTA DELFI CETENA FRASCHINI MOTORI
Tech. Cluster in Campania
Tech. Cluster in Sicily
Network partner
Merchant Defence Offshore
NAVALIMPIANTI DEMONT WÄRTSILÄ MOLTENI & C INTERNA LEONARDO DRILL MEC BLUE EDGE IMESA CONTRACT TECNIMPIANTI
TECH MARINE ELETTRA ROSSETTI NAVAL B&B ITALIA SERTUBI CIMOLAI AVIO WÄRTSILÄ ENERGIA MARINO MECCANO PROGETTI
AQUA PRYSMIAN IREM ENGINEERING
Foreign subsidiaries also participate in the and organizations in the industry, also industrial associations in their countries participating in voluntary initiatives. and work with a number of associations
32 33 FINCANTIERI GROUP FINCANTIERI GROUP
CREATION AND DISTRIBUTION OF ECONOMIC traded during the year, with an average daily Distribution of Economic Value the economic impact of the Group’s business VALUE trading volume of around 7.1 million shares. The Group believes in an economy that is for the main stakeholder categories. In terms In 2017, Fincantieri started and concluded the a system of relations based on trust and of Economic Value distribution, it is important Stock performance programme for the purchase of its own shares transparency, an integrated dynamic network to observe that the impacts produced are The stock gained 164.7% over 2017, going according to the “Performance Share Plan of cross-cutting communities, built over time mostly limited to the local area, specifically from a price of € 0.47 on 30 December 2016 2016 - 2018” incentive scheme, implementing to create and exchange value. In this context, with reference to personnel and suppliers. to € 1.25 on 29 December 2017. The FTSE the decision made at the Shareholders’ the distribution of Economic Value represents MIB, the index comprising Italy's 40 largest Meeting of 19 May 2017. In the period from stocks, gained 13.6% over the same period, 30th October 2017 and 30th November 2017, while the FTSE Mid Cap, of which Fincantieri Fincantieri purchased on the online stock is part, gained 32.3%. In 2017, the market exchange (MTA), organized and managed by performance of the FINCANTIERI S.p.A. stocks the Borsa Italiana S.p.A., as well on Bats, Chi-X showed a constant growth trend. Fincantieri and Turquoise, through Exane BNP Paribas, shares benefited from the positive results of 4,706,890 of its own shares, equal to about the period, which proved the solid foundation 0.28% of the shares representing the company of the Group and its capacity for growth in share capital. line with management guidelines. The stock recorded an average price for the year of € 0.89 per share, with a peak value for the period of € 1.32 on 11th December. In terms of stock liquidity, a total of 1.8 billion shares were
Indirect impact: economic satellite businesses greater, mostly benefitting the area where it is Thanks to a competitive production model located, through the involvement of a wide and
(*) Number of shares outstanding multiplied by reference share price at period end. that is strongly linked to the Italian production diverse network of companies, many of which network, Fincantieri generates additional are highly specialized small or medium-sized euro impact on the national economy. enterprises. Each cruise ship built by Fincantieri 1.40 develops on average € 2.7 to € 3.6 billion of 1.20 business volume for the Italian System:
PRODUCTION PRODUCTION • Directly generated by Fincantieri: about € 600 1.00 MODEL SUPPLY IMPACT OF CHAIN FINCANTIERI to 800 million; (Make or buy) + = ON THE ITALIAN 0.80 ECONOMY • Additional through stimulation of satellite businesses: about € 2.1 to 2.8 billion. 0.60 With the current record level of order backlog, 0.40 According to a Censis study, the Fifth Report over the next few years, Fincantieri will have, due on the Economy of the Sea 2015, every euro to the multiplier effect of its activities, an average 0.20 invested in shipyards produces a value 4.5 times dec 2016 jan 2017 feb 2017 mar 2017 apr 2017 may 2017 jun 2017 jul 2017 aug 2017 sept 2017 oct 2017 nov 2017 dec 2017 annual impact of 1% on the Italian GDP. FINCANTIERI FTSE MIB FTSE MID CAP
34 35 FINCANTIERI GROUP FINCANTIERI GROUP
The impact on employment can be calculated jobs at sub-contractors. In turn, it is necessary by initially considering direct employment, to add to this final employment figure the that is direct jobs at Fincantieri in Italy, to satellite business jobs due to consumption by which first-tier indirect employment is added, the families of all employees. that is jobs at Fincantieri contractors, as well as second-tier employment, represented by
Employed by Employed by Fincantieri Fincantieri 28,000 76,600 companies subcontractors
48,600
30,700 Employed in economic sectors correlated with the consumption of those directly employed 8,300 and indirectly employed (first-tier) by Fincantieri
Direct employees Direct + Indirect Total Direct + Indirect Employment induced Total Employment in Italy 1st tier 1st and 2nd tier through consumption
~ 3.7x ~ 5.5x ~ 3.4x ~ 8.9x
MULTIPLIER
Source: FC estimates based on Censis data.
From the graph it can be seen that: Considering both the effects upstream and downstream of its production organization, • the approximately 8,300 direct resources Fincantieri has a significant employment at Fincantieri activate in Italy more than multiplier effect of about 8.9, confirming the 48,600 employment units in industry broad impact the Company has on the country’s (considering contracts and subcontracts) in the economic system. manufacturing industry; • adding to this the induced effect of family consumption, employment exceeds 76,000 units.
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C REATION OF SUSTAINABLE VALUE
SUSTAINABILITY GOVERNANCE
OUR STAKEHOLDERS
MATERIALITY MATRIX
OUR COMMITMENTS
38 39 FINCANTIERI GROUP FINCANTIERI GROUP
Value is created through In order to prepare the Sustainability Report, all aspects of sustainability, the Sustainability responsible management of growth defining and implementing the relative Reporting unit was also established, reporting that is and will be increasingly PRESIDENTE processes for reporting the necessary to the Group Accounting and Administration intelligent, sustainable and GIANFRANCO information, a multifunctional Working unit. To collect and manage the information inclusive, to the advantage of the AGOSTINETTO Group was established, coordinated by for the Sustainability Report from foreign company, the citizens, and the the Administration, Finance and Control companies, local project managers were community Department. The Working Group includes identified for the VARD Group and for the representatives nominated by the Legal Fincantieri Marine Group, who coordinate A company is sustainable when each person MASSIMILIANO NICOLETTA Affairs, Human Resources and Industrial in turn with a working group, specifically has understood its value and reflects in their CESARE GIADROSSI Relations, Marketing, Communication and dedicated to sustainability: the foreign everyday work the fundamental principles of Media Relations, Internal Auditing, Research sustainability representatives report directly responsibility, commitment and consideration and Innovation, and Administration, Finance to the Sustainability Reporting Unit and/or the for stakeholder expectations, creating a and Control departments/units. To coordinate Working Group. virtuous cycle that generates synergy and SIMONE shared, proactive commitment. ANICHINI Fincantieri is one of the world’s leading shipbuilders and this position comes with the responsibility to act in a sustainable manner. In fact, it is in Fincantieri’s interest to combine competitiveness with environmental SUSTAINABILITY sustainability and social responsibility. Furthermore, the Committee provides the COMMITTEE For Fincantieri, sustainability is a way Board of Directors with proposals and of working, it is the commitment to consultation services, specifically it: create long-lasting value. Sustainability translates into strict respect for the law, • adequately investigates issues related to the sustainability of Company activities protection of workers, environmental LOCAL and the dynamics of its interaction with all Board of protection, and safeguarding the interests REPRESENTATIVES stakeholders; Administration SUSTAINABILITY of the shareholders, employees, customers, ABROAD REPORTING UNIT commercial and financial partners, local • supports the Board in relation to the communities and groups, creating value for Company’s respect for and promotion of all stakeholders. Sustainability in Fincantieri human rights, the right to employment, the is a long journey whose destination is the environment, the battle against organized creation of sustainable value. crime, health and safety within the Company’s activities, the rights of all stakeholders, and product responsibility. MULTIFUNCTIONAL SUSTAINABILITY GOVERNANCE WORKING GROUP
To guarantee adequate protection and The chairman of the committee reports on monitoring of sustainability processes, in the committee’s activities at each Board of 2016 the Board of Directors at Fincantieri Directors meeting. For the 2017 year, the established the Sustainability Committee, Committee agreed to meet, as a rule, at the nominating the relevant members. same time as the Board of Directors. For more information on the Sustainability Committee please refer to the Report on Corporate Governance and Ownership Structure The Sustainability Committee, composed 2017, available on the website www.fincantieri.com/en/governance of four independent members, defines the strategic guidelines, commitments and projects for sustainable development and social responsibility.
40 41 FINCANTIERI GROUP FINCANTIERI GROUP
OUR STAKEHOLDERS and social topics, and can even result in topics to be highlighted, facilitating the making the stakeholder engagement process both direct and indirect negative financial definition of a strategy for communication and particularly complex. Information was then Fincantieri considers the process of listening impact. Furthermore, Fincantieri considers implementation of existing relationships, which collected regarding the methods and tools for to and involving its stakeholders an essential that stakeholder involvement allows for the takes into account the social impact of the communication between the Company and tool for the organization to take action and development of intangible assets which topic and the organisation’s response to it. the major stakeholders. obtain the best results: the values that emerge translate into long-term relationships, thus In 2016 the Group’s stakeholders, both and are affirmed by dialogue strengthen the becoming a source of competitive advantage. internal and external, were identified and The approaches adopted and the types of Group’s reputation and ethics. This dialogue involves the creation of a divided into seven macro groups. The analysis dialogue identified are set out below: A lack of integrated dialogue leads to common knowledge base among the Group highlighted the heterogeneity of Company’s the risk of local conflict on environmental and its stakeholders, which allows sensitive stakeholders, with widely differing needs,
ENVIRONMENT FINANCIAL COMMUNITY Fincantieri’s mission is to become a model of excellence in environmental protection, and it therefore adopts, in its Financial dialogue is constant, in compliance with the law and in line with best working practices, strategic choices and business processes at all levels, the principles of environmental sustainability ensuring complete transparency when carrying out its work Press releases, periodic presentation of financial results, conference calls, shareholder meetings, meetings with Direct contact with bodies and ad hoc working parties investors and analysts, one-to-one presentations, road shows and shipyard tours. E-mail address dedicated to Investor Relations for institutional investors and small shareholders Continuous dialogue and periodic meetings Frequency as set by law and internal organizational models; dialogue with investors is continuous and related to investor engagement strategies; dialogue with analysts is continuous and related to analyst engagement strategies
COMMUNITY Fincantieri is aware of its role in the local community and considers the demands of the latter, collaborating systematically with all the relevant figures in the area. Fincantieri promotes proactive initiatives that foster the development of the local community and areas where the Company operates CUSTOMERS Fincantieri always listens to its customers’ needs, each ship is the product of a strong relationship with the Participation in working parties, meetings with representatives from NGOs and non-profit organizations, civil society FREQUENCY shipowner institutions and associations, press conferences. Periodic meetings with schools and universities to discuss and develop topics for research, internships, work-study schemes The entire shipbuilding process calls for a continuous relationship between the project manager and the TOOLS AND CHANNELS customer and their staff Continuous dialogue and periodic meetings STAKEHOLDER Direct, continuous relationship
Fincantieri SUPPLIERS AND PARTNERS HUMAN RESOURCES Fincantieri suppliers are a valuable strategic resource. That is why the Company promotes long-term At Fincantieri people come first. Constant collaboration and cooperation allow for individual and group growth, relationships and sharing of responsibilities and development making ideas and practices, responsibilities and actions a common factor Days dedicated to education, individual performance reviews, discussions with labour unions and employee Meetings with strategic suppliers, dedicated audits at selected suppliers, feedback questionnaires. Various representatives, involvement in specific initiatives, and performance evaluation meetings. Courses, various activities related to health and safety topics activities, e-learning related to health and safety topics Continuous dialogue and periodic meetings Direct, continuous relationship
LABOUR UNIONS Fincantieri confirms the importance of hands-on representation of its workers through suitable levels of involvement, awareness and the assignment of co-responsibility for production objectives and issues of common interest. EDUCATION AND PUBLIC ADMINISTRATION Accordingly, a new system of industrial relations has been implemented in line with the relevant commercial, economic and The distinct nature of Fincantieri’s business calls for a continuous relationship with Institutions and the Public Administration production context Direct contacts, internet, ad hoc working groups, definition and development of common projects Meetings, working parties/discussions and the establishment of appropriate joint bodies to address various topics with the labour unions on all levels Direct, continuous relationship Continuous dialogue and periodic meetings
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Continuous dialogue with stakeholders is Another important tool in Fincantieri’s MATERIALITY MATRIX The evaluation of each aspect, with a scale from ensured by the Media Relations department, communications strategy is use of social 1 to 4, where 4 is “highly relevant”, was performed established to transmit corporate messages networks. The Company has been present for Also in 2016, for the first time, the Fincantieri by the multifunctional working group members to the press, as well as to distribute news some time on LinkedIn, YouTube and since 2017 Group performed a Materiality Analysis which taking into account 2 aspects (relevance for stories across the Group. These prerogatives on Instagram. was updated in 2017 in compliance with the Fincantieri, relevance for stakeholders) and are the sum of multiple activities that all start Global Reporting Initiative Guidelines, Version validated by the heads of the units/departments with direct discussion with management to 4 (GRI-G4). The purpose of the materiality involved. A materiality threshold (2) has been determine strategies and communication analysis is to identify, using a matrix, the material defined, beyond which an issue must be needs, which range from texts like press LinkedIn, the main social network for professional topics, that is those themes that have significant accounted for. Based on the evaluation, the graph releases, support and in-depth notes, and contacts, allows Fincantieri to give the Company economic, environmental, social, and reputational highlights a linear correlation between the topics speeches, to constant and widespread prestige through the publication of high-quality impacts on the organization and a significant that are relevant for Fincantieri and those that monitoring of printed, web and social content and the contribution of its employees, influence on the evaluations and decisions of are relevant for the stakeholders, indicating a network sources, with related press surveys, using the method of employer branding. The the relevant stakeholders. The assessment of substantial overlap of interests within and outside and relationships with national, international contents promoted through LinkedIn are the importance of the topics identified must be the Group. and trade media system representatives, corporate and related to recruiting, including: performed based on the significance of i) their both on a routine basis and when there impact on the organization (economic, social, and All topics indicated in the matrix are subject to are corporate events, during which the • press releases; environmental) and ii) their level of influence on inclusion in the Sustainability Report. department fully manages press participation, • financial reports (quarterly, six-monthly, financial stakeholders’ decisions. from invitations to calibration of the message statements and shareholders meetings); to be passed on. • Group news: communication of events such as deliveries of vessels, presence at fairs, and 4.00 In 2017 the initiatives promoted produced: partnerships; • job posting; 3.80 NUMBER OF ITEMS • presence at career days.
3.60 In January 2018, the Fincantieri profile had Governance Health and safety and business in the workplace about 58,000 followers. Since 30 March 2017 3.40 Relations with integrity local communities RADIO AND Fincantieri has also been active on Instagram, Economic and financial sustainability 354 TELEVISION SERVICES 3.20 the third most popular social network after Environmental impact of products and services Product quality and compliance Facebook and YouTube. On this platform, the Customer satisfaction with technical standards PAPER ITEMS 3.00 Company publishes high-impact photographs Stakeholder Protection of employment and 2,264 that create, through the strength of the image, industrial relationships 2.80 Training and education ONLINE ITEMS a daily dialogue with the user, raising awareness Company welfare Climate change 25,402 Human rights Environmental management and improving the reputation of the brand 2.60
among its stakeholders. In January 2018 the Diversity and equal opportunity Procurement activities channel had more than 4,200 followers, with a 2.40 Innovation, research and development monthly growth rate of between 300 and 400 new users. Fincantieri Yachts has its own profile 2.20 Added to this are the relationships with internal on Instagram, dedicated to the luxury segment, and external customers, i.e. other Group functions 2.00 established just a few months after the Corporate 2.00 2.20 2.40 2.60 2.80 3.00 3.20 3.40 3.60 3.80 4.00 involved in office activity and the corresponding channel. With the same objectives, some of the Fincantieri functions of the various merchant shipowners, Group’s subsidiaries are also present on this Economic responsibility Environmental responsibility Social responsibility Product responsibility Human resources responsibility Governance Navies, national and local institutions, private social platform. Specifically, Fincantieri Australia, bodies, and companies with which Fincantieri CETENA, VARD and Fincantieri Marine Group works. have helped to expand the follower base of the The description of the material topics is available in the annexes p .168 Group to more than 90,000 people.
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OUR COMMITMENTS
Through the involvement of the stakeholders and materiality analysis, Fincantieri has identified the material issues considered most relevant for both the Group and its stakeholders. For these topics, Fincantieri must develop concrete and consistent actions and initiatives. Fincantieri’s commitment to increasingly sustainable and responsible development is expressed through its communication of the sustainability culture, promotion of a responsible supply chain, employee involvement, continuous improvement of health and safety at work, support for technological innovation, maintenance of high levels of customer satisfaction and loyalty, reduction in environmental impact, and its contribution to the fight against climate change. The figure indicates the main sustainability Human commitments. resources resp.
Environmental resp.
46 47 FINCANTIERI GROUP FINCANTIERI GROUP
R ESPONSIBLE BUSINESS MANAGEMENT
CORPORATE GOVERNANCE
SUSTAINABILITY IN RISK MAPPING
OUR RULES
PRIVACY PROTECTION
48 49 FINCANTIERI GROUP FINCANTIERI GROUP
Transparency, propriety, legality 71.6% of Fincantieri’s share capital is held, Corporate governance at Fincantieri has the and dialogue create the culture of through the subsidiary Fintecna S.p.A., following structure: responsibility by Cassa Depositi e Prestiti (CDP) S.p.A., a company controlled by the Ministry of Economy and Finance.
The composition in terms of shareholder SHAREHOLDERS’ MEETING structure is shown below:
SHAREHOLDER STRUCTURE BOARD OF DIRECTORS FINTECNA S.p.A. INDISTINCT CONTROL BOARD OF CHAIRMAN REMUNERATION NOMINATION SUSTAINABILITY MARKET SUPERVISORY CHIEF EXECUTIVE AND RISK EXTERNAL STATUTORY OFFICER (Director in charge COMMITTEE COMMITTEE COMMITTEE of the ICRMS) COMMITTEE AUDITORS AUDITORS BODY
28.08%
0.28% FINCANTIERI GENERAL RISK HEAD OF MANAGER OFFICER NTERNAL S.p.A. 71.64% AUDITING (TREASURY SHARES)
CHIEF FINANCIAL FINANCIAL REPORTING OFFICER CHARACTERISTICS OF YES/NO % MANAGER THE SHAREHOLDER STRUCTURE capital Shareholder Agreements No -
Shareholding threshold for the submission of slates for - 1% the appointment of corporate bodies and officers
CORPORATE GOVERNANCE
The corporate governance model has a central role in the clear, responsible performance of the Group’s business, contributing significantly to the creation of sustainable value in the medium to long term. It is in line with the recommendations of the Corporate Governance Code issued by the Italian Stock Market.
50 51 FINCANTIERI GROUP FINCANTIERI GROUP
Shareholders’ Meeting powers for its ordinary and extraordinary OTHER INFORMATION ON THE BOARD OF DIRECTORS* The Shareholders’ Meeting is the company administration, including the definition of body through which the shareholders strategic direction, organization and control FINCANTIERI participate in Company decisions on topics of the Company and the Group. The Board of reserved for them according to law and Directors currently consists of nine members, Company Bylaws. six of whom are independent. The Board of Directors was nominated during the Ordinary Board of Directors Shareholders’ Meeting held on 19 May 2016 for The Company’s Board of Directors (BoD) financial years 2016, 2017, and 2018. is the Company’s central organization for corporate governance, holding the widest
COMPOSITION OF THE BOARD OF DIRECTORS AND ITS COMMITTEES ON THE DATE OF THE REPORT
(*) The statistical data of this table for Fincantieri refer to the composition and operation of the Board of Directors during 2017. (**) Latest available data taken from the Assonime - Emittenti Titoli S.p.A. report: “Corporate Governance in Italy: corporate governance, remunerations and comply-or-explain (year 2017)” of February 2018.
CHARACTERISTICS OF THE MEMBERS OF THE BOARD OF DIRECTORS
AREA OF EXPERTISE AGE
11.1% 44.44% INTERNATIONAL RELATIONS 33.3% 11.1% LEGAL
INDUSTRIAL 22.22% 22.22% 55.5% 44.4% FINANCIAL
PLANNING AND STRATEGY (1) The Member of the Control and Risk Committee who replaces the Director Palermo when SC Sustainability Committee. 11.11% the committee, meeting as the IPT Committee, examines major operations with related parties. C: Chairman of the Committee. CRC: Control and Risk Committee. (√): Satisfies the requirements. RC: Remuneration Committee. (-): Not applicable. NC: Nomination Committee. (X): Member of the Committee. 45/50 years 51/55 years 55/65 years 65 +
52 53 FINCANTIERI GROUP FINCANTIERI GROUP
The Board of Directors has structured its the committees are non-executive directors, shareholders. To this end, an Auditor who, regarding the limits on the cumulative number organization, also establishing four dedicated mostly independent, and have functional areas independently or for a third party, has an of administration and control offices taken Board Committees, that provide consultancy of expertise for performing the roles they have interest in a specific Company operation, must within Italian joint stock companies as required and proactive functions: the Control and Risk been assigned. Furthermore, in the Control inform all the other Auditors and the Chairman by the current regulations and the Bylaws. Committee, the Remuneration Committee, the and Risk Committee at least one member of the Board in a timely, exhaustive manner Nomination Committee and the Sustainability has adequate expertise and experience in of the nature, terms, origins, and extent of Committee. Their composition, responsibilities accounting and finance or risk management, their interest. Auditors also respect the rules and methods of operation, as well as the while in the Remuneration Committee at least powers and means assigned, are regulated one member has adequate expertise and OTHER INFORMATION ON THE BOARD OF STATUTORY AUDITORS* by specific regulations approved by the experience in pay policies or finance. FINCANTIERI Board of Directors when these committees Board of Statutory Auditors were established and later amended based The Board of Statutory Auditors consists of on changes introduced over time to the Corporate Governance Code. All members of
INFORMATION ON THE COMMITTEES* (*) The statistical data of this table for Fincantieri refer to the composition and operation of the Board of Statutory Auditors during 2017. (**) Latest available data taken from the Assonime - Emittenti Titoli S.p.A. report: “Corporate Governance in Italy: corporate governance, remunerations and comply-or-explain (year 2017)” of February 2018. FINCANTIERI For more information on Corporate Governance please see the Report on Corporate Governance and Ownership Structure 2017, available on the website www.fincantieri.com/en/governance
Remuneration Policy the General Manager, Key Management The Fincantieri Remuneration Policy is Personnel and other Key Management approved annually by the Board of Directors, Personnel. Management of the Remuneration on the proposal of the Remuneration Policy is delegated to the Chief Executive Committee. The Board of Directors is also Officer, supported by the Human Resources the company body responsible for proper and Industrial Relations Management. enactment of the Policy, that relies on the Verification of the qualitative and quantitative support of the Remuneration Committee, performance objectives and consequent which acts to provide consultancy and determination of any sums of money due to (*) The statistical data of this table for Fincantieri refer to the composition and operation of its internal Committees during 2017. (**) Latest available data taken from the Assonime - Emittenti Titoli S.p.A. report: “Corporate Governance in Italy: corporate governance, remunerations and comply-or-explain (year 2017)” of February 2018. proposals. The adequacy, overall consistency, the interested parties is performed following (1) Of which one also as the RPT Committee and one exclusively as the RPT Committee. and concrete application of the Remuneration approval of the financial statements for Policy are evaluated by the Remuneration the year following verification by the Chief three Standing members and three Alternate meet the requirements of good reputation, Committee, as recommended by the Executive Officer. members, nominated at the ordinary professional attitude and independence. Corporate Governance Code and as indicated Shareholders’ meeting with following a The Auditors act completely autonomously in the regulations for the committee. The The Remuneration Policy is aimed at valuing dedicated procedure. The Auditors in office and independently with regard to all of the Remuneration Committee consists of three sustainable performance and attainment non-executive members, two of whom are of the strategic priorities of the Company, COMPOSITION OF THE BOARD OF STATUTORY AUDITORS independent and at least one of whom has ensuring that: MEMBERS ROLE EXPIRY OF TERM adequate knowledge and experience in finance or pay policy, evaluated by the Board • there is adequate balance between the fixed of Directors when nominated. The parties and variable components, and, for the latter, covered by the Remuneration Policy are between the short-term and medium- to long- the Chairman, the Chief Executive Officer, term variable components;
54 55 FINCANTIERI GROUP FINCANTIERI GROUP
• the fixed component is sufficient to Below is a graphic representation The structure of the remuneration package is remunerate the work of the party, should the of the pay-mix: set out below: variable component not be issued due to failure to meet performance objectives; PAY MIX • a significant part of the remuneration of those concerned comes from three-year incentive programs, distributed after the performance 25.0% 38.5% 32.6% 25.5% 24.0% objectives have been attained, which also have a duration of three-years and which are 75.0% 22.0% 21.5% predefined, measureable, and indicative of the 23.1% 23.9% operating efficiency of the Company as well as 52.5% 54.5% 43.5% the ability to remunerate the invested capital and 38.5% generate dividends for the shareholders in the medium to long term; Chairman Chief Executive General Key Other Key • the Company has the right to request the Officer Manager Management Management return of all or part of variable components Personnel Personnel of remuneration paid (or to withhold deferred FIXED COMPONENT sums) that were calculated on the basis of SHORT TERM VARIABLE COMPONENT data subsequently revealed to be clearly MEDIUM TO LONG TERM VARIABLE COMPONENT wrong (claw-back).
On 19th May, 2017 the Board of Directors approved a medium to long term (Performance Share Plan 2016-2018) for the Company management. The creation of sustainable value in the medium to long term, alignment of the interests of management with those of the shareholders and support for retention capacity are the primary objectives of this Plan, in line with the indications in the Corporate Governance Code and the best and most widespread market practices.
56 57 FINCANTIERI GROUP FINCANTIERI GROUP
Below is a summary of the characteristics The Risk Management System development The Guidelinees, approved by the Board of of the various components of the variable and optimization project, begun in 2015, has Directors, identify the main parties involved remuneration: been assigned to the Risk Officer. During in the preparation and implementation of an 2017, following issue of the risk management effective internal control and risk management policy at the end of 2016, a procedure was system, involving, based on their area of issued that identifies the common operating expertise the following parties, in addition to modes for all of the Company’s business areas the Board of Directors and the Control and and departments for risk assessment and Risk Committee: mitigation activities. A process of alignment with ERM (Enterprise Risk Management) concepts was begun. Finally, the Risk Assessment update reports were issued by the Company to enact the ERM procedure, to the benefit of the SCIGR participants.
For further information, see the Remuneration Report 2017, available on the internet site: www.fincantieri.com/en/governance
System of internal control and risk of the main risks as well as the dependability, management accuracy, reliability and timeliness of the The system of internal control and risk financial report. This system, based on leading management (hereinafter referred to by its international practices, is divided into the three Italian acronym "SCIGR") is formed by a set of traditional levels of control: tools, organisational structures, and Company procedures aimed at contributing business • 1st level: the operational functions identify conduct which is honest, fair and consistent and evaluate the risks and implement specific with the objectives set by the Board of treatments for their management; Directors. The SCIGR is integrated within the • 2nd level: the functions responsible for risk general organisational aspects and corporate control define the methods and tools for governance system adopted by the Company risk management and perform monitoring and, taking into account the main reference activities; models, allows and promotes the identification, • 3rd level: the Internal Auditing Function measurement, management, and monitoring provides independent evaluations regarding the entire system.
58 59 FINCANTIERI GROUP FINCANTIERI GROUP
It is also required that all employees of compliance aspects, specifically regarding the Group, as part of their functions and compliance activities under Legislative Decree responsibilities, actively intervene according to 231/2001, including the audits requested by the the methods defined in the Group’s regulatory Supervisory Body (Oversight Board) of the main system and internal procedures for the Italian Companies in the Group; maintenance, updating, and correct operation • Financial&Reporting Audit this mostly involves of the SCIGR. internal audits (according to Law No. 262/2005) at Group level, as well as specific activities Following is a representative diagram of the and audits required by the Board of Statutory parties involved in Risk Management at various Auditors and/or the Control and Risk Committee titles: and/or the Financial Reporting Manager; Internal Auditing Function • Risk Management with reference to the main The mission of the Internal Auditing function is activities of Risk Assessment and interfacing to monitor the adequacy of the internal control with and supporting the Company functions system of the Company and its subsidiaries, engaged in risk management as well as other ensuring continuous improvement of its aspects relating to internal audit, such as effectiveness and efficiency by providing an BOARD OF Support of segregation of duties (SOD). Oversight Overall INTERNAL CONTROL independent, autonomous and objective audit STATUTORY AUDITORS orientation and BOARD the Board’s OVERSIGHT OF DIRECTORS AND RISK service involving verification, validation and BOARD (OB) monitoring COMMITTEE (CRC) evaluations and decisions consultancy. The Internal Auditing activities are performed based on an Audit Plan, approved by the Board of Directors, based on the risk analysis and prioritization, according to the Assurance assessment performed at Group level. Since INTERNAL (3rd level of 2015, the VARD Holding Ltd Board, upon the AUDITING defence) proposal of the Audit Committee, has entrusted to the Fincantieri Internal Auditing function the responsibility for performing the internal Establishment and audits for the VARD Group. The Head of Internal maintenance DIRECTOR RESPONSIBLE RISK OFFICER Auditing is appointed to this role by the Board FOR THE ICRMS of Directors, based on the proposal of the Director responsible for SCIGR, following a positive opinion by the Internal Control and Risk Committee and after consulting the Board of Statutory Auditors. The Head of Internal Auditing reports directly to the Board of Directors and Implementation MANAGEMENT Control and Risk Committee for the planning, of ERM Risk (DIRECTORS, DEPARTMENTS, execution and communication of his activities; management at UNITS) whereas for administrative aspects, he reports to all levels of the organization the Chief Executive Officer. The main activities performed by Internal Auditing are the following:
• Operational&Compliance Audit with reference For more information on the Internal Control and Risk Management System please refer to the Report on Corporate Governance and Ownership Structure 2017, available on the website www.fincantieri.com/en/governance to operational audit and legal and regulatory
60 61 FINCANTIERI GROUP FINCANTIERI GROUP
SUSTAINABILITY IN RISK MAPPING the Company. Consequently, the Risk Map MACRO AREA and specific Corporate Social Responsibility At Fincantieri, the Risk Officer is responsible (CSR) category was integrated; the for mapping the main corporate risks as following is the list of the 10 sustainability well as reporting the mitigation actions risks included in Fincantieri’s Risk Universe. that the business takes to manage the risk (Enterprise Risk Management). In the second half of 2017, the Risk Officer function considered it necessary to integrate the company risk model (Fincantieri Risk Universe) with additional Governance risks concerning the company’s social responsibility following a structured process specifically centred on sustainability. The Fincantieri Risk Universe has been defined as part of the “ERM project” which provided the Company with an Enterprise level process for detecting, evaluating and monitoring the main corporate risks, in compliance with the requirements for listed companies as per the Corporate Governance Code for the Italian Stock Market. The process is divided into parts, Human starting with risk (and opportunity) Resources mapping in terms of sustainability and resp. climate change, using specific tools to identify the main risks by business area. The objective is to provide a vision of the set of pervasive and evolving risks and the interconnections that may pose Product resp. a threat to the creation of value and achievement of the Company’s objectives in a context similar to that of Fincantieri. From this process, 16 potential categories Governance, of sustainability risk were identified. economics, human resources, These risks were then compared with the social and Fincantieri corporate risk model and with environmental the materiality matrix in the Sustainability resp. Report, to check whether it was necessary to add them to the Risk Universe. From the analysis it emerged that some sustainability risks are already present in Fincantieri’s Risk Environmental Universe; others, following more in-depth resp. checks, were not considered applicable to
62 63 FINCANTIERI GROUP
In compliance with the business procedures Organizational Model governing risk assessment and mitigation Fincantieri has adopted an organisation, which require two yearly meetings in management and control model according to conjunction with the year end financial Legislative Decree 231/2001 (Organizational statements and the half-year report, an initial Model), the latest version of which was approved sustainability risk assessment is prepared by the Board of Directors on 9 November 2017. It in time for the approval of the financial consists of a general section, which illustrates the statements, to allow the Board of Directors to principles, departments and basic components formulate an opinion based on their areas of of the Organizational Model, and special parts, expertise on the company’s internal control which identify the activities at risk of crime, the and risk management system. principles of conduct, and the control procedures The reports required for the information to for the specific types of crimes considered be provided to the company bodies will from relevant. now on be supplemented by a specific report on CSR risks to the Sustainability Committee, The organisational model is available on the internet site with the objective of facilitating its function of www.fincantieri.com/en/sustainability/governance providing guidance to the Company. Code of Conduct circumstances in which Fincantieri operates contrary to the words or spirit of the Code will OUR RULES All of the Group’s activities are performed means that it is important to clearly reaffirm be subject to sanctions as outlined in the Code. observing the laws, international conventions the set of values the Group recognizes, accepts The principles outlined in the Code of Conduct Fincantieri performs its business with and in strict respect for human rights as and shares, and all the responsibilities that it can be supported by specific directives, respect for the law, internal regulations sanctioned by the Universal Declaration assumes both internally and externally. This is regulations or internal procedures aimed at and professional ethics. To this end, it has by the United Nations. Fincantieri works the reason for which the Code of Conduct was making its application more concrete and developed a set of policies and guidelines within a framework of fair competition with prepared. Observance of the code by all of the effective. The Code is shared with all parties that support its business. honesty, integrity, decency and good faith, people within the Company is of fundamental who have business relations with Fincantieri. with respect for the legitimate interests of importance for the efficient operation, Fincantieri monitors observation of the Code, In particular: its stakeholders, shareholders, employees, reliability and reputation of the Group. These providing suitable tools for information, customers, commercial and financial partners, factors add up to a significant asset for the prevention and control, and ensuring the • Organizational Model civil society and the local communities in success of the business. Fincantieri employees transparency of existing operations and • Code of Conduct areas in which Fincantieri is present with its must not only comply with the general duties conduct. Verification of implementation of • Anticorruption Policy business. Fincantieri believes that success of loyalty, fidelity and propriety and fulfil their the Code of Conduct and its application is the • Legality Agreement can be long lasting only with responsible, employment contract in good faith, but they responsibility of the Board of Directors and • Health and safety Policy ethical business management; the Group’s must also refrain from competing with the the company management, who can also be actions are performed with integrity, honesty Group, observe company rules and abide by promoters for proposals to be integrated or For more information on the Health and safety Policy, please see the section People p. 82 and dedication and based on mutual trust, the standards set out in this Code. Employee modifications to be made to its contents. so that growth is also guided by the principle relationships at every level must be based on • Environmental Policy of shared values. Anyone who works at transparency, propriety, loyalty and mutual For more information on the environmental Policy, please see the section Environment and Climate change p. 1 52 Fincantieri, without any distinction or respect. The directors and every member of exception, is committed to observing these the business must be familiar with the contents principles and ensure they are observed within of the Code, must actively contribute to its their area of operations and responsibility. implementation and report any weaknesses In no way does the conviction of acting in and breaches. Fincantieri is committed to the interest or advantage of the Company encouraging and promoting knowledge of justify adopting conduct that goes against the Code among employees and including these principles. The complexity of the any constructive contributions. All conduct
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CODE OF CONDUCT
1 7 COMPLIANCE WITH LAWS, Fincantieri respects the laws and regulations in force in each Country or context in which it operates, consistent with Fincantieri maintains a relationship of trust and loyalty with each of its employees. They must be loyal and faithful and pursue the REGULATIONS AND THIS the principles, objectives and commitments defined in the Code. CODE OF CONDUCT LOYALTY TO THE COMPANY Company’s interests. Employees must avoid any situation or activity that could lead to a conflict of interest or that could interfere with their AND CONFLICT OF INTERESTS ability to make impartial decisions, in the best interests of the Company. 2 8 All actions and activities performed or planned by Fincantieri must be legitimate, checkable, comply with the established regulations, procedures, and regulations and be based on correct and complete information. In commercial, promotional, and BUSINESS ACTIVITIES industrial relationships, the Company acts according to ethical and legal regulations. Information must not be shared that is of a confidential nature, in relation to knowledge or data that belongs to the Company. AND RELATIONS CONFIDENTIAL This information must not be used, communicated or disclosed without specific authorization by the individuals responsible for INFORMATION this information, knowledge or data. 3 Fincantieri seeks correct, transparent relationships with its customers and suppliers by offering competitive products and 9 respecting the rules of fair competition. Supplier selection and determination of purchase conditions, performed by Group RELATIONS WITH RELATIONS WITH PUBLIC Contacts with public officials or government authorities, the public administration, and Italian, European or foreign CUSTOMERS AND SUPPLIERS companies, must be based on an objective evaluation of the quality, price and ability of the supplier to guarantee an adequate OFFICERS WITHIN level of service. NATIONAL, EUROPEAN AND institutions are limited to those that, upon specific authorization, are assigned to negotiate with or contact these FOREIGN PUBLIC INSTITUTIONS administrations, public officials, authorities, organisations, AND WITH OTHER PARTIES and/or institutions. REPRESENTING COLLECTIVE INTERESTS 4 10
Each employee must conserve and protect the assets and resources that the Company entrusts them with to perform their responsibilities. COMPANY'S ASSETS Fincantieri regulates its relationships with political organizations and labour unions exclusively based on the current laws, RELATIONS WITH POLITICAL regulations and agreements/contracts, guaranteeing the highest principles of transparency and correct conduct. ORGANIZATIONS AND TRADE UNIONS 5 11 HUMAN RESOURCES, Fincantieri is committed to guaranteeing the professionalism of its employees as well as the health and safety SAFETY AND ENVIRONMENT of its employees, external collaborators, customers and communities affected by its business and to reducing its environmental impact. RELATIONS WITH THE PRESS AND MEDIA Information for external use must be truthful and transparent. 6 12 ACCURACY Fincantieri’s financial, accounting and management proof must be based on precise, complete, and verifiable information, in AND TRANSPARENCY line with the hierarchical structure and organisation of the Company. OF ACCOUNTS AND RECORDS Violation of the Code of Conduct compromises EFFECTS OF the trust between the Company and employee. THE VIOLATIONS
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Anti-corruption Policy During 2017 a structured process was controls to verify if what is required by the Key to Fincantieri’s reputation is the ability to examined and drafted for contracts with anti-corruption procedures has been met develop its business with integrity, decency, foreign governments or companies that within the range of the annual planned audits, transparency, honesty and integrity, with respect require offset agreements, with the objective approved by the Board of Directors. The for national and foreign law and regulations. of generating business or creating production Oversight Board plays a special role. For this reason, Fincantieri is determined to capacity or economic value in the customer’s Its activities call for the periodic collection of update its activities in respect for the values Country. This working document, which will confidential information in order to identify and principles contained in its Code of Conduct, be converted into an operating procedure potentially risky conduct with reference adopted and communicated extensively since during 2018, further expands and reinforces to corruption both with respect to Italian 2002, in the conviction that business conduct the procedural framework of the Company and foreign Public Administrations, and must be based on correct, respectful, and in terms of anticorruption safeguards, to private parties. The Organizational, ethical behaviour and respect for the regulations providing uniform criteria for managing highly Management and Control Model according in force. Considering the broad geographic confidential contracts for a company that works to Legislative Decree No. 231/01 and the context in which Fincantieri operates, the with counterparties with proven reputation. internationally. company regulatory framework are subject Company has adopted a number of internal For this reason, the Company subjects every In addition to the above, since 2009 the to a continuous updating process to comply standards aimed at identifying and applying a commercial partner to a mandatory process for Company has also adopted a system for with organisational and legal changes and global anti-corruption policy that defines the the preliminary checking of ethical requirements. reporting violations to the Oversight Board to adequately respond to the possible risk of expectations for performing business, in strict Fourthly, it is necessary that Fincantieri and (so-called whistleblowing), defined in the committing crimes. compliance with the best international standards the Group Companies maintain accurate Organisational Model, which allows employees regarding anti-corruption legislation. The first of accounting books and recordings. The Group’s and third parties to report problems regarding Communication and training on the these instruments is the anti-corruption Policy anti-corruption commitment, established first lack of the respect for the Code of Conduct, the anti-corruption procedures and policies adopted by the Company in 2014. The primary of all within the Code of Conduct, is stated in a Organisational Model, the Company procedures Since 2016, the Internal Auditing function, objective of the anti-corruption Policy, along with series of corporate documents that constitute adopted by the Company or legal regulations. along with the Oversight Board, has the procedures related to it, is to underscore the existing safeguards for fighting corruption The main characteristics of the Company’s provided support to the Human Resources Company and Group commitment to fighting (anti-corruption documents) in the operational “whistleblowing” system are: Management with preparatory activities organized crime in all its forms and our zero and geographical areas where the Group is for the expanded on-line training project tolerance for this phenomenon, by constantly present. This regulatory body, which evolves • two information channels, one of which is a based on Legislative Decree No. 231/01 reinforcing the level of integrity and transparency continuously, calls for the following confidential information and technology system, open to which began in the same year. The training within internal conduct, with a positive effect topics, each regulated by specific documents: employees and third parties; system for this course, primarily focused on the Company’s reputation within its current (i) management of relations with the Public • confidentiality guarantee regarding information on anti-corruption and safety at work, operating context. Specifically, through the anti- Administration; (ii) agency, intermediary and and identity of the registering party, with the has been divided into differentiated paths corruption policy, Fincantieri prohibits all forms commercial service agreements; (iii) donations, exception of legal obligations; in order to allow targeted distribution of of corruption: illegitimate favours, collusion, gifts, sponsoring, presents, and hospitality; • commitment not to retaliate (with disciplinary the information based on the roles of the requests, direct and/or made through third (iv) external collaborations; (v) conflicts of sanctions, demotion, suspension or termination) people involved. It was held in e-learning parties, for personal or career advantage, for interest and (vi) compliance in terms of financial or discriminate against personnel in the mode over the platform adopted by the oneself or for others. Firstly, it is prohibited to statements and resolutions in application of Company who have made reports in good faith; Company with the objective of expanding procure, promise or offer objects of value to any Legislative Decree 231/01. • application of the sanction system to parties the population reached, offering greater one, including Public Administration officials, to These instructions are valid for all Fincantieri that violate the commitments, obligations and flexibility of use for the users, guaranteeing obtain or maintain business in an inappropriate employees and are expressly shared by all protection guaranteed by the Company. the provision of uniform information, as manner or to secure undue business advantages. suppliers upon acceptance of the purchase order well as reducing the costs of training Secondly, it is prohibited to accept gifts or and by business partners upon signing of the This system is in line with recent legal and refresher courses. The course, held objects of value in return for conduct contrary to contract. A role of primary importance is played regulations (Law No. 179 dated 30/11/2017). by a lawyer as part of a collaboration the principles listed in the Policy and the Code of by the managers who must respect and ensure agreement with a top international Conduct, as well as in the applicable documents that their collaborators respect anti-corruption With reference to the Parent Company, consultancy company, is divided into paths and laws. Thirdly, Fincantieri collaborates only procedures and monitor compliance. the Internal Auditing function examines and independently evaluates the internal
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differentiated based on the resources Directors receives an annual report from among the parties, serve to combat attempts PRIVACY PROTECTION involved. The “general” path has been the Oversight Board on the activities at infiltration by organized crime, through a delivered to all employees of the Parent performed, including training. more intense and constant collaboration with During the year, Fincantieri received Company (equipped with company PC and Regarding foreign subsidiaries, the the responsible bodies, within a framework of ISO/IEC 27001:2013 and ISO 9001:2015 email), while agents and specific company Fincantieri Marine Group, Fincantieri guaranteed, participative public safety. This certifications for the Quality Management functions were also given specific modules. Marine Systems North America Inc. and choice was determined by our experience Systems for Information Security from During 2017, the program initiated in 2016 VARD Group have held training on the that, also on a local level, showed how similar RINA Services. Specifically, the ISO 27001 continued with the administration of a Code of Conduct and business ethics. agreements have significant value in terms of certification process verified the compliance specific on-line course focusing on safety The table below shows the data on the ability to adjust the threshold of audits and, of ICT (information and communications at work and the environment, and a new overall number of employees who received consequently, organized crime prevention, as technology) business processes with edition of the general course on Legislative training in 2016 and 2017. they strengthen the monitoring network and the requirements of the reference Decree No. 231/01 was begun for those allow the extension of controls to supplies international standards for information who had not participated in the previous and services otherwise excluded from security management. This fully positive edition. For employees of subsidiaries, measures against organized crime. Therefore, result represents a decisive step towards specific anticorruption training meetings the Company has given the Prefecture full satisfying the new European regulation are held, organized by their oversight authority to perform, through the responsible regarding data protection (GDPR), to be boards, while at this time the extension bodies, timely audits through access to fully applied in May 2018. Furthermore, as of this training to the e-learning mode is shipyards and, in conjunction with the far as privacy protection regulations are only at the planning stage. The Board of commitments undertaken in the agreements concerned, implementation of the Regulator's in question, provides the inspecting authorities requirements dated 25/6/2009 concerning with the documentation on the contractors the duties of the system administrator 2016 2017 and subcontractors. Drawing on the experience continued during the year. gained over time with the various agreements endorsed by the Company locally, on 27 February 2017, Italy’s Minister of the Interior and Fincantieri Chief Executive Officer signed the National Legality Framework Agreement at the Ministry’s headquarters in Rome with the objective of preventing infiltration attempts by The data refer to the entire Fincantieri Group organized crime. The agreement represents a fundamental milestone that unifies the Legality Agreements as undue interference and pressures from procedures for control against organized crime FINCANTIERI S.p.A., having identified in the common criminals, preventing any possible on a national level in companies operating on tender system a key element for its ability to infiltration attempt by organized crime during contracts and sub-contracts in all locations of develop and raise its competitive standing in its the process of assignment of tenders, in capital the Fincantieri Group. reference markets, has always paid maximum expenditure, and in production activities. attention, also in this context, to ensuring To this end, starting in 1999, Fincantieri began transparency and compliance with agreements close cooperation with the responsible area and laws regulating the job market. To this end, authorities regarding some of its production a strict regulatory procedure was adopted for units, in time reaching the signature of the the presence of personnel from contractor Legality Agreements with the Prefectures companies in the plant. It is in fact in the of Palermo, Naples, Venice and Ancona, and interest of the same Company to ensure Transparency Protocols with the Prefectures respect for legality and to defend the market of Gorizia and Venice. These Agreements, from interference by organized crime, as well which guarantee the exchange of information
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P EOPLE
RECRUITMENT POLICIES, MANAGEMENT AND ENHANCEMENT OF HUMAN CAPITAL
TRAINING AND DEVELOPMENT
DIVERSITY AND EQUAL OPPORTUNITIES
HEALTH AND SAFETY
COMPANY WELFARE
INDUSTRIAL RELATIONS
REMUNERATION
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Fincantieri believes that people involvement of all employees, with growing, come first, and it pursues constant and transparent information and sustainable growth through shared communication and an increasing ability to MEN AND WOMEN changes listen. Having started on the path of change, the Company above all wants to increase MAN WOMEN For Fincantieri, people come before the sense of belonging and the spirit of 11% everything else, they are the Company's cohesion, reinforcing this distinctive mark by 89% most important asset. Talented women sharing the values and principles on which PERMANENT and men from all over the world represent the Group's identity is based, as well as 92% PERMANENT 93% the Company’s potential for knowledge contributing to an improvement in the work TEMPORARY TEMPORARY and innovative capabilities. Individual and environment and company atmosphere. 8% 7% Group growth takes place with the constant In December 2016, an anonymous TYPE OF CONTRACT collaboration and cooperation of all, bringing questionnaire was distributed to the entire MANUAL WORKERS together ideas and practice, skills and actions, company population (manual workers, office MIDDLE MANAGERS international and multidisciplinary exchanges workers, middle managers and executives), and dialogue. The Company's future is based and the results of the survey were shared EXECUTIVES 58% on the ability to share risks, achievements during meetings with all the employees, 2% 34% and create value in a shared manner, with the which were held at the various company 6% contribution of all. offices, involving almost 6,500 resources. At the end of 2017, the same procedure It is precisely with the aim of "putting OFFICE WORKERS people at the core" that at the end of last was used for a monitoring process set up year, the Company launched an important to review the new change initiatives and change management project, Fincantieri collect people's suggestions, with a view to continuous improvement. for the Future: an organic management EMPLOYEES BY AGE RANGE change pathway based on the active
WORKFORCE BY TOTAL GEOGRAPHICAL AREA: 19,545 30-50 YEARS >50 YEARS 8,314 ITALY 13% <30 YEARS 66% 21% 43% ASIA 2,158 11% 805 4% The data do not include the 11 employees of the smaller foreign companies that carry out new business development initiatives. NORTH AMERICA
1,345 4 7% 0%
6,919 SOUTH AMERICA 35% REST OCEANIA OF EUROPE
The data refer to the entire Fincantieri Group.
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RECRUITMENT POLICIES, MANAGEMENT towards Professional Technical Education and TRAINING AND DEVELOPMENT at accompanying newly appointed middle AND ENHANCEMENT OF HUMAN CAPITAL Training and promoting an effective link with the management towards positions of greater professional needs expressed by the world of Over the course of 2017, Fincantieri put in responsibility and creating a strong sense of To support, promote and implement the work and research. place specific measures to increase and belonging and group spirit. Many editions development of its business, Fincantieri The activities organized by the Public Education define the expertise of internal resources in of the Academy training course were also continues to carry out recruitment and employer System that Fincantieri subscribes to notably terms of skills related to the technological offered, updated in terms of content and branding activities aimed at identifying and include: company visits, conferences and solutions being used. extended to the entire population of recently recruiting the best talent on the market. seminars, educational initiatives by business The goal was also and above all to train hired young people, with the aim of involving Over the years, Fincantieri has developed active managers and internships, work-study projects, and increase cross-functional skills related them in the change path that the Company and direct partnerships with the Upper Technical and collaborations in the research and innovation to the management and promotion of has undertaken in recent years. The technical Schools of the regions where the Company sector. To increase the effectiveness of its innovation, change management and project training mainly focused on issues related operates, with national and international international recruitment, in 2017 Fincantieri management, as well as soft skills such as to design (rules and regulations) and also Universities and leading Business Schools, carried out some detailed mapping of the shared leadership, emotional intelligence and involved relevant suppliers. In terms of to attract young talent leaving schools and technical/engineering skills present on the advanced communication. support for technology development, the academies. In 2017, Fincantieri received more various markets, both in terms of design and Integrated Ship Design&Manufacturing than 3,000 applications from young school- production. The VARD Group continued its (ISDM) project is particularly important; this leavers and university graduates, which led to change management plan focused on the four HOURS OF TRAINING PROVIDED Over involves the development of an integrated the establishment of over 200 internships. In the shipyards in the Møre og Romsdal area, funded platform for use of technical software same year, at the end of their work experience, by the regional agency of the Norwegian Labour 550,000 in document design and management. over 90 young resources were hired by the and Welfare Administration. This contribution Over 3,550 hours of training have already Company. was directed at the redevelopment of resources been dedicated to this project in 2017, Fincantieri is also looking for professionals with in the light of the product diversification strategy 28.6 and cascade training for all future users AVERAGE HOURS OF specific and cross-functional technical skills adopted by the Norwegian Group. The recruiting TRAINING PER CAPITA is planned over the coming years. Under and solid experience, in order to promote the campaign for technical resources and skilled the Quality Improvement plan developed development of the Group's internal know-how. workers was also particularly significant, driven by the Merchant Shipping Division, the In the selection phase, the focus is equally by the increasing workloads of the Romanian Training for Quality project, launched in divided between evaluation of candidates' VARD shipyards. The difficulty of finding 9% 2016, has continued; this aims to improve technical knowledge and their cross-functional resources in sparsely populated areas such as the final quality of the ship product by and interpersonal skills, specifically detailed by those of the Danube Delta led to use of a wide monitoring the correct implementation of the Fincantieri skills model. In accordance with range of search tools, although on the labour each phase of the construction process. 50% 41% its Charter of Values, behaviours in relation to front the best results were achieved through the Following the assessment, which involved People, Safety, Integrity, Customer Care and partnership with publicly controlled Vietnamese almost 12,000 workers and over 1,500 Innovation are given high priority. companies and the collaboration between supervisors, in Fincantieri and in the Furthermore, Fincantieri continues to strengthen the Romanian and Vietnamese shipyards for subcontractor network, a specific Training its employer branding measures, both through selection and training. In terms of policies for Catalogue was developed, also available for the main social media tools and through hiring managers, it is significant that the majority the personnel of contracting companies, MANAGEMENT SAFETY TECHNICAL collaboration with Universities, Upper Technical come from the country of operation. TRAINING TRAINING TRAINING to enhance technical skills with specific
Schools and the Alumni associations of the most The data do not include the 11 employees of the smaller foreign companies that training sessions. In the training category carry out new business development initiatives. important national and international Business dedicated to process support software and Schools. The Fincantieri Corporate University, a working methods, significant training was Fincantieri actively participates in the main group management training school set up by given in 2017 on Primavera P6, a system and orientation initiatives organized by the Public Fincantieri in 2013 with the most renowned for planning, scheduling and monitoring Education System in order to meet the demand Italian Business Schools as partners, complex projects. Tablets were assigned to from companies for new and highly technical and hosted the annual edition of Competency supervisors, for direct use in production, and technological skills, helping to orient students Management, a training programme aimed this required the development of a bespoke
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training plan that has already involved over part and a total of over 35,200 hours of effective development plans in terms of 600 resources. With the aim of significantly training provided. To protect the safety and training activities in the short/medium improving the level of linguistic competence health of its personnel, increasingly involved term, coaching, planning of career paths of Company personnel, in 2017 a in foreign countries, a Travel Security course and job rotation. Training and development Company Language Policy was established was devised over the course of 2017 to activities also continued in the foreign and a new method of language training raise employees’ awareness of the risks in subsidiaries. In the United States, Fincantieri was introduced, also delivered through an the various countries and develop useful Marine Group offered training to various advanced e-learning platform. In order to behavioural strategies to manage any crisis employees about different specific aspects, promote a growing sense of responsibility situations effectively. As part of the human over the course of 2017. Fincantieri Ace among employees, training and information capital development processes, for several Marine and Fincantieri Bay Shipbuilding were provided on the Organizational Model years now the Group has adopted an annual set up weekly health and safety meetings and the administrative responsibility of legal performance assessment system, which for people involved in production and entities under Legislative Decree No. 231/01. in 2017 was also extended to the manual management, focused each time on different Furthermore, a course on Enterprise Risk workers. In order to evaluate, enhance specific aspects. Focused training sessions Management was developed, a process and develop the wealth of management were also organized, aimed at enhancing for identifying, assessing, managing and skills in the Company, set up individual various skills to improve efficiency and monitoring the main risks within the development plans and define managerial comply with quality standards. Fincantieri Company. growth paths, Fincantieri established Bay Shipbuilding completed the Birthday Confirming its constant commitment in some time ago a process for assessing Safety Training, an annual review of all the field ofHealth&Safety at work, which the potential of resources. This aims to relevant safety issues with reference to is a fundamental corporate value. Only highlight strengths, areas for improvement the position and responsibilities of each for FINCANTIERI S.p.A., in 2017, training and motivation for growth of individual employee. Leadership training sessions activities in this field included almost 1,000 resources, allowing them to develop self- are then delivered every two years to training events, with 4,500 people taking awareness of their abilities and to identify corporate employees selected on the basis of their potential and achievements. The TRAVEL SECURITY IS IMPORTANT, FIND OUT WHY working groups are made up of about 20 employees from all departments (Finance, HR, etc.), selected by their managers and senior management. Fincantieri Marine Systems offers employees technical training
Code of Conduct Prepare for travel Protect company Keep your eyes open Behave appropriately Your health is important based on the department they belong to. When travelling for Fincantieri, Before leaving, remember to information Pay attention to what As a Fincantieri employee, When you're abroad, always employees undertake to read carefully the directions • Remember not to talk out is happening around you must always behave in try to drink bottled water. Eat Furthermore, all employees are encouraged promote the Group's interests. provided by the Travel Security loud about business matters: You. Criminals could compliance with the laws of cooked food. Wash/disinfect Employees must follow the office. They will help you better someone might be listening! take advantage of your the country you are visiting. your hands often: this simple to take part in training and professional laws, customs and regulations understand the situation carelessness; do not help routine helps avoid illness. of the host country and you are about to face. Learn • Do not forget that using them. Do not go to isolated Remember that Fincantieri Before leaving, consult the behave in a manner that does about customs, laws and free Wi-Fi can be extremely areas, especially if you are is committed to fighting occupational physician and/ development seminars throughout the not harm the interests of the local culture by consulting dangerous: do not use open alone. Try to vary your routine corruption and inappropriate or the Health and Safety Company. the T.R.I.S. company platform, networks, they are not and the route from home/hotel behaviour. Department Manager of year. At the Group level, VARD continued Travel Security section, secure! (e.g. at hotels or to the office. your office if you have health The tips included in this available on the company airports). problems or would like more its mandatory training on health and safety guide can help you travel intranet. Do not forget that it • If you are carrying company Make a copy of your information on the health safely: this is our goal! Also is better to avoid discussing assets (mobile phone, laptop, documents aspects of travelling. at work, favouring e-learning methods remember to keep in mind politics, religion or personal etc.), do not leave them Losing documents is a your colleagues travelling beliefs in public and that unattended; they contain common problem, so keep a compared to traditional lessons. In Romania, with you. If someone has a in some countries the confidential data copy in a safe place. Do not problem, but hesitates to ask consumption of alcohol and/or show your passport/identity for help, contact Fincantieri drugs is strictly prohibited. card unless requested by a the training mainly concerned the analysis Corporate Security, which is public authority. always there to lend a hand. Attention to frauds and strengthening of the various skills, in Once you arrive at your destination, do not rely on order to prepare the shipyards to meet a unofficial services. Be extremely careful when someone offers to help you. Do growing order backlog and the increased not accept lifts from strangers or improvised taxis. demand for skilled workers. VARD Tulcea and the local Chamber of Commerce continued their partnership, focusing their
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period the figure for men stood at 1.5. Over equal opportunities and protecting human the last 6 years there has been a percentage rights. increase in the number of women who have Even in countries with the greatest risk for been affected by professional improvements human rights such as Vietnam and Brazil, the in terms of level or qualification (in 2017, Company constantly monitors this issue. 10.5% of the measures concerned the female population). With regard to multiculturalism, Fincantieri is putting in place recruiting, job rotation and employer branding policies aimed at creating an increasingly broad interaction and integration among the Group's people worldwide, with a view to enhancing and sharing know-how and disseminating best practices. Fincantieri is careful to protect and nurture its multicultural context, in particular in the production sites, where people of dozens of different nationalities work together every day. To this end, over the course of the year the Company promoted various initiatives actions on the workers selection process and each person to build an open, flexible and aimed at increasing the sense of belonging the professional training of new welders. The helpful approach, essential for the Company's to the Group and the inclusion not only of efforts on safety and trade induction of the success. employees, but also of people working for new Vietnamese employees in Romania also In recent years, starting from a context suppliers. Examples included ship delivery absorbed significant resources, with the use historically associated with a significant male ceremonies and family days. Fincantieri of Vietnamese-language media developed presence, due to the type of work in the Marine Group and Fincantieri Marine Systems by the colleagues from Vung Tau. VARD shipbuilding-manufacturing sector, Fincantieri offer employees annual training on diversity, continued to support training activities at has made a strong push towards gender using recruiting agencies that share the same the Vietnamese shipyard, enhancing local diversity, for technical design roles and for principles in terms of diversity. Every year skills. The Vietnamese employees completed staff in managerial positions. In Italy, the they produce an Affirmative Action Plan that many training initiatives dedicated to presence of women has been increasing since governs programmes focused on enhancing leadership development, as well as initiatives 2015, reaching about 7% in 2017. This increase diversity, with specific targets to be on health, safety and quality. was distributed across the categories achieved, providing information on possible of office workers, middle managers and improvement initiatives. DIVERSITY AND EQUAL OPPORTUNITIES executives. The increase in new entries for women is particularly significant as a Human rights Fincantieri considers the diversity within share of the total number of hires, which All the Group's activities are carried out in the Group to be a valuable asset. Like was 21% in 2017, up by 3 percentage points compliance with the law, the International other elements that characterize the compared to 2015. Furthermore, if the focus Conventions and in strict observance of the economic and social framework, diversity is restricted to young hires under the age of human rights enshrined in the United Nations allows the Company to capture the ideas 30, the percentage of women rises further Universal Declaration. and opportunities brought to light by the and is rising, reaching 17% in 2015, 24% in Fincantieri undertakes to ensure that transformations and changes taking place. 2016 and 29% in 2017. In the period 2015- company policy are designed to create and Working within a professional context based 2017, for women, every exit corresponded to maintain the skills and competences of each on diversity and multiculturalism allows the entry of 2.8 resources, while in the same employee, recognizing merits, respecting
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HEALTH AND SAFETY The Company is committed to constantly from the previous year, both in terms of events developing an active role in the field of and frequency. The objective of promoting a occupational health and safety through the corporate health and safety at work culture has OUR POLICY following actions: resulted in various initiatives within the Towards Zero Accidents project and the development Safety • always acting in full compliance with of activities to certify the occupational health mandatory laws and reference standards; and safety management systems in the various • It is of fundamental importance for • managing the hazards and risks identified business units in accordance with OHSAS the Fincantieri Group and the priority in relation to activities and duties, constantly 18001. In this regard, it is worth mentioning in all the choices our Company has updating knowledge on the subject in order to the introduction and development of special made. prevent accidents and injuries; software for controlling access to work areas • periodically reviewing the Health&Safety policy which qualify as a "confined space”, as part of a • It is a necessary condition both for and targets; plan to improve the related process. our present and for the future we are • raising the skills and awareness of all people Computerization has also begun for the building. involved in its activities by means of adequate management of the safety data sheets used to information and training, in the belief that more manage chemical risk. • It means all sharing the same knowledge brings more safety and ensures the example to follow - for our top cultural change necessary to improve results; management and for each one of us. • cooperating with stakeholders on policy and continuous improvement, so as to create • It means growth for our Company, in alignment between the Company's top
terms of efficiency and quality. management and all employees.
• It means training and information: During 2017, FINCANTIERI S.p.A. strengthened
more knowledge, more safety. the cultural and professional development path
of staff working on business processes, with • It means cultural change. particular attention to environmental protection
and the health and safety of workers. These activities, also implemented through
This is the only way to achieve our specific projects, have actively involved “Zero Accidents” target, our one and employees of Fincantieri and of its contractors. only top priority. The implementation of the certification tools of the company management systems for environment, sanitation, and health and safety at work has further contributed to the sharing and strengthening of the growth path of GIUSEPPE BONO Chief Executive Officer of FINCANTIERI S.p.A. company culture on these issues. The need for prompt information about newly-published
rules and regulations affecting the business has been fulfilled with a special management tool, allowing immediate evaluation of the necessary
requirements and continuous compliance. With regard to the reduction of accidents, 2017 also confirmed the positive trend recorded in recent years, further improving the figures
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FINCANTIERI GROUP FINCANTIERI GROUP
The table below shows the main indicators and Safety Improvement Award already won concerning health and safety: during 2016.
BS OHSAS 18001 and SA 8000 certifications During 2017, Fincantieri continued implementing and consolidating the occupational health and safety management systems in its operating units, with the aim of supporting the implementation of the related policy adopted by the Company. The sites that had already been certified (Muggiano, Riva The data do not include the 11 employees of the smaller foreign companies that carry out new business development initiatives. Trigoso, Ancona, Navy Division ships, Arsenale Triestino San Marco, Marghera, Castellammare Towards Zero Accidents project The project confirmed a positive trend in its di Stabia, Sestri) continued to be monitored The Towards Zero Accidents project involves results. Other initiatives carried out by the by RINA, while new certificates of compliance all the resources working at the Group's Italian subsidiary include: were obtained by the plant in Monfalcone and production sites. Initiatives to support the the Merchant Ship Directorate. Over the course project continued over the course of 2017, • using the Safety Observation tool to report of the year, the Palermo plant implemented to consolidate best practices, such as safety irregularities; its management system in compliance with and environmental coordination meetings, • reporting health and safety indicators at the the requirements of the BS OHSAS 18001 carried out with the participation of all the monthly management meetings; standard. The 2018 objective is to start the supervisors involved in the individual areas, • organizing the prevention week to reduce certification activity with RINA conducting the and the documented analysis of accidents internal accidents; "Stage 1" audit. In 2017, the US site of Marinette and near misses. There was growing interest • monthly discussions on health and safety also achieved the certification of its health and appreciation in the project called Active (required by law in Brazil); and safety at work management system, Safety (in addition to the compulsory training • electing an internal commission for the in compliance with the requirements of BS courses required by Italian Legislative Decree prevention of accidents; OHSAS 18001. The VARD Group obtained the 81/08 and the State-Regions Agreement), • the internal distribution of a booklet with OHSAS 18001 certification for the VARD Braila whose innovative element relates to the the ten golden rules that are fundamental for and Tulcea (Romania) shipyards, as well as direct involvement of supervisors (production occupational health and safety, based on the VARD Vung Tau (Vietnam). All VARD shipyards managers for Fincantieri, site managers Group guidelines. are aligned with SA 8000 standards, which are for external companies) in the training and based on the International Labour Organization information of employees. In parallel with The US subsidiaries continued their (ILO) conventions and the Universal Declaration the monthly presentation of the topical data commitment in line with the objectives set by of Human Rights (Vung Tau is also certified). sheets, shown as part of the Active Safety the communication and training projects in campaign, a Visual Information initiative was the field of safety and the environment. This implemented, which included putting up year both for the Marinette and the Sturgeon posters and showing videos about the specific Bay shipyards won numerous awards for risks described in the data sheets. excellence, including the James S. Cogswell As regards VARD, similarly to Towards Zero Outstanding Industrial Security Achievement Accidents, the Vision Zero project was and the Wisconsin Corporate Safety Award implemented with the aim of averting any by the Defence Security Service and the kind of incident, both for people and for the Wisconsin Manufacturers & Commerce (WMC), environment. in addition to the Safety Excellence Award
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COMPANY WELFARE the new National Collective Bargaining for at least 30 hours a week. Benefits include an agreement was signed which entirely Agreement for the metalworking industry, enrolment in the Group Health Medical Plan, replaces all the previous provisions on the Fincantieri considers welfare to be a strongly signed in November 2016, which included which includes various services, medical subject in force in the Company, streamlining innovative tool compared to traditional the introduction of welfare tools for the first coverage and a vision coverage plan that the management and use of leave permits, remuneration and incentive measures, time at the National Collective Bargaining includes eye care. The costs are borne partly with a simultaneous reduction of the total destined to become an integral part of Agreement level. The mechanism provides for by the Company and partly by the worker. number of working hours. At the local level, modern and efficient resource management. the possibility of allocating part of bonuses In addition, there are other benefits not agreements have been reached in most The 2016 corporate agreement introduced an to the supplementary pension fund, which included in the above plans, such as the on- of the production sites to govern hours in annual Social Bonus, to be used exclusively has encouraged a significant increase in the site clinic, vacation and holiday pay, the policy terms of work/life balance (entry/exit) and on welfare services. As an alternative to number of subscribers. on short/long term disability, life insurance for a different shift work structure. The trade monetary benefits, this also gave workers the In relation to supplementary health care, for accidental death & dismemberment, the union agreements that instituted solidarity option to convert the variable awards linked the 2016 Company agreement had already retirement plan and the employee assistance leave are also worth mentioning, offering to the achievement of the assigned targets increased the annual per capita contribution programme. the option of passing holiday and leave into welfare entitlements. The Company also paid by the Company. With the subsequent The VARD Group provides its employees with entitlements to factory colleagues who adds a further 10% to the value converted into implementing agreement of February medical assistance, internal catering services, have a serious need in Ancona e Palermo welfare by employees who decide to convert 2017, an annual supplementary health care food cards and training incentives. shipyards. A specific agreement provided for their bonuses. Thereby, achieving production plan was set up, which fully renewed and the transfer of the Systems and Components objectives can lead to a strengthening of strengthened employee benefits. As part of INDUSTRIAL RELATIONS Department from Genoa to Riva Trigoso. the overall welfare system. Fincantieri's the Company's contribution, this agreement As for the foreign subsidiaries, the welfare system covered all employees and has extended the Health Plan to dependent Industrial relations in Fincantieri are based constructive industrial relations climate was also extends to Italian subsidiaries and/or family members, as well as to civil union on a participatory model, developed through confirmed when Fincantieri Marine Group associates falling within the scope of the partners. Health services were provided both various Joint Bodies, which in some cases signed a long-term collective agreement supplementary labour agreement (Isotta directly, through the facilities contracted include workers. Within the respective with the Trade Union. Fraschini Motori S.p.A., CETENA S.p.A. and by the operator (identified in agreement joint committees, at the national level, the Finally, it should be noted that in 2017, the Orizzonte Sistemi Navali S.p.A.). Through a with the Trade Unions) and in the form Training Plans and the initiatives to reduce FINCANTIERI S.p.A. unionisation rate was dedicated portal, it gives access to a wide of "reimbursement". The February 2017 accidents and protect the environment 43.7%. range of goods and services (education, agreement on health care also confirmed (projects Towards Zero Accidents and health, culture and leisure, mortgages and our most favourable arrangement for Active Safety) have been published and loans, supplementary pensions and fringe pensioners, namely the option to continue disseminated. In terms of health and safety, benefits). The diversification assured by the taking advantage of supplementary health the planned initiatives involving the suppliers wealth of options in the welfare portal, the care with contributions at their own expense. were also illustrated. In 2017, the meetings information disseminated to staff and the In December, an agreement was defined with the national Trade Unions continued periodic support provided by the "welfare with the Trade Unions (at the national level) with the aim of constantly monitoring and corners" have fostered the emergence for the adjustment of the new 2018 Health improving the services offered in the field of a welfare "culture" as a useful tool for Plan, which will guarantee a considerable of corporate welfare and supplementary responding effectively to the needs of increase in the level of services offered to health care. In particular, the supplementary employees and their families, as evidenced by employees and a further extension of the health care services for 2017 were regulated, the high levels of use of the available services. family unit covered with the contribution paid and with a subsequent agreement, the new The growing importance of welfare has by the Company. Fincantieri Marine Group Health Plan starting from 2018 was defined. also been confirmed by the provisions of provides benefits to all employees who work As regards trade union leave permits,
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REMUNERATION
The remuneration of our employees is defined in line with the market and in accordance with National Collective Bargaining Agreements and Company Supplementary Contracts or local regulations.
€ 912 mln PERSONNEL COSTS
With regard to Italian operations, the ratio between Gross Annual Remuneration earned on average by female workers and the average for men is 1.0 for executives, 0.9 for middle managers, 0.9 for office workers, and 0.9 for manual workers. On the other hand, as far as American activities are concerned, using the same parameters, the ratio is 1.6 for executives, 0.8 for middle managers, 0.8 for office workers and 0.7 for manual workers.
The data do not include the 11 employees of the smaller foreign companies that carry out new business development initiatives.
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R ESEARCH AND INNOVATION
PARTNERSHIP
WIDESPREAD NETWORK
SIGNIFICANT PROJECTS
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Innovation is growth and Fincantieri never ceases to INNOVATION Innovation with suppliers innovate COSTS IN RESEARCH, € 113 mln INNOVATION AND High DEVELOPMENT 4 For the Fincantieri Group, innovation is BUSINESS 3 IDENTIFICATION EXPANSION one of the key factors for maintaining 5 OF NEW BUSINESS Monitoring THROUGH INCREMENTAL competitiveness. Fincantieri's strategic OPPORTUNITIES megatrends INNOVATIONS positioning on high-tech, high value-added With regard to the Italian activities, in order to products and the globalized competitive align the Research and Innovation initiatives CONTINUITY TECHNOLOGY DISCONTINUITY environment in which the Group operates with the strategic objectives of the company, AND MAINTENANCE SCOUTING AND GROWTH
the Company has defined a structured and Business expansion INNOVATION require a significant and constant INCREMENTAL articulated process for preparing the Research ROOTED IN commitment in terms of research and INNOVATION OF CURRENT CURRENT New product and Innovation Plan (R&I Plan) (1), consistent PRODUCTS development on new technologies and new PRODUCTS concepts products. The vessels designed and built with the needs of the market. The R&I Plan has 1 R&I plan 2 by the Group are essentially tailor-made a three-year duration and is redefined annually products, created according to the needs in order to maintain consistency between developed activities and company objectives. of the shipowner and at the forefront of Low Degree of technological innovation technology and innovation, particularly in the The R&I Plan represents the operational Low High tool with which the Company gains greater areas of safety, environmental compatibility, competitiveness on the international market, stability and speed of operation as well as allowing it to generate and maintain a The VARD Group conducts a wide range of in the offshore sector, and in particular its automation systems. competitive edge against the competition. Research and Development (R&D) activities, experience with ships able to operate in For this reason, the Group's research and The Company also continuously studies new both in-house and in collaboration with extreme weather conditions. development activities are divided into three concepts (2) to bring innovation within its industrial and academic partners. Innovation As far as Fincantieri Marine Group is main arms: business perimeter, collaborates with suppliers is a dynamic process that leads to a constant concerned, research and innovation initiatives evolution of projects aimed at improving begin in the evaluation phase of new • development of technologies and (3) to produce innovative solutions that also performance and increasing product value. shipbuilding contracts, in order to guarantee innovation applied to the order, i.e. activities lead to business expansion, and constantly The projects pay particular attention to a functional design, responding fully to the aimed at developing technological solutions, monitors megatrends (4) to anticipate vessel safety, functionality, efficiency, fuel challenges imposed by the shipbuilding, materials and innovative systems, carried out market trends. These different processes are consumption and environmental impact. development and improvement processes. during the design of ships and necessary to supported by the Technology Scouting, aimed The diversification strategy launched by VARD New projects are presented in informal meet the specific needs of shipowners; to the identification of emerging technologies and to the technology transfer. at the beginning of 2016 had a profound meetings to examine the idea, its feasibility • off-the-shelf innovation, i.e. activities aimed impact on its R&D activity. In order to enter and the related costs/risks. After an initial at developing specific design solutions that new market segments, in parallel with its assessment, the project is presented to the are not directly applicable to orders, but are commercial initiatives VARD has developed management and, thus, entrusted to different necessary to anticipate customer needs, for several new projects using its extensive R&D, work groups. example in areas such as energy efficiency engineering and design expertise acquired and reduction of operating costs, maximizing payload and perceived quality and improving safety; • long-term innovation, i.e. activities aimed at developing the Group's technologies also in order to support entry into new sectors.
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PARTNERSHIP • Network of Universities and research partnership agreement in force since 2011 are mentioned in November 2017 in a study by institutions: the Company collaborates particularly significant. Fincantieri has involved the Italian Association for Industrial Research Fincantieri develops innovation processes systematically with the main European the CNR in three important multidisciplinary (AIRI) as the first concrete case of private/ both internally and in partnership with various and international institutes, developing research projects within the framework of the public collaboration. Overall, the programme external stakeholders. These initiatives aim important territorial partnerships with both tender for the Ministry of Infrastructure and consists of 6 main research lines, which are to strengthen the collaboration network and the National Technological Clusters and the Transport (MIT) in the field of shipbuilding and complementary to each other. The topics being implement the "Open Innovation" paradigm, Regional Technological Districts, supporting design. developed range from the design of an energy- a model of collaboration between companies the development of breakthrough ideas This collaboration is an important example smart cabin to the optimized development and research structures. to be transferred to the product through of Open Innovation between private industry of production technologies, management In order to ensure the integration of internal the Innovation Challenge with different and the main Research Centre in the Country. and consumption of on-board electric power, and external innovation processes, the R&I universities, and through the systematic The latter also serves as a focal point for innovative navigation solutions that rely on Plan takes into consideration the various study of conceptual technical solutions to collaboration with a wider academic network, augmented reality technologies, and systems stakeholders: be validated in the industrial field. These ensuring the coordinated development of for the safety and rescue of passengers and partnerships are complementary to the innovative solutions by 10 CNR research crew. • Suppliers: in recent years, the Company activities carried out by the Fincantieri institutes and 3 leading Italian universities. The chart below shows the main partnerships has launched the Innovation project with "CETENA" research centre, which is the key One of the projects making up the existing launched by Fincantieri with research bodies. Suppliers, where the main technological element of the Group's pre-competitive collaboration, namely the E-Cabin project, was systems of the ship product are established, research. the development roadmap is defined and the main strategic partners are identified. WIDESPREAD NETWORK UNIVERSITY OF TRIESTE A common strategy is identified with fluid dynamics, ship stability, these partners for coordinated and joint Main national partnerships TRIESTE noise and vibrations, structures UNIVERSITY OF GENOA and new materials technological development capable of As regards the activities carried out by the European HOLISHIP project, hydrodynamics, operational scenarios, supporting roadmap implementation. Italian companies of the Group, Fincantieri, on-board energy management, IT INTERNATIONAL SCHOOL OF together with the subsidiary company solutions, tests for systems and Individual R&I initiatives with external components, automation ADVANCED STUDIES technology partners are then included in the CETENA, is a partner in many research and parametric optimization, hull- propeller interactions, emissions R&I Plan; collaboration activities with numerous research reduction and energy efficiency • Customers: a Voice of the Customer (VoC) centres. This is above all, but not solely, analysis is conducted by product type based on participation in many research and GENOA through direct contacts and market studies. innovation projects conducted on a regional, NAPLES This makes it possible to identify areas that national, European and international scale. are important to the client, also associating The Group is very active in national and them with a level of perception, satisfaction international cooperation, and interacts with NATIONAL and importance. The correlated analysis of various institutions to raise awareness of the RESEARCH COUNCIL these data, both qualitative and quantitative, importance of research for the naval sector, European HOLISHIP project, tank tests, fluid dynamics, identifies the technological priorities to be steer the technological agenda and promote energy efficiency and energy management, on-board developed, categorized as short, medium, support measures. Fincantieri has launched FEDERICO II UNIVERSITY comfort, automation OF NAPLES long and very long term. The R&I Plan specific partnerships for the development of LA SAPIENZA characterization of paints for therefore represents a tool for implementing theme-based innovation projects, which allow UNIVERSITY OF ROME naval use electrochemical technologies for ROME strategies to meet customer needs; technological knowledge to be increased while energy storage, energy efficiency • Classification bodies: responsible for promoting the development of innovative certifying the consistency of the product solutions applicable on board. and the production methods applied to The collaboration initiatives that started in 2017 the product, they are a significant partner with the Consiglio Nazionale di Ricerca (CNR, throughout the entire production chain; National Research Council) on the basis of the
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Main partnerships in Europe During 2017, European stakeholders in the maritime sector focused their efforts on restoring and relaunching the WATERBORNE European Technology Platform, which changed the membership procedures, opening it up to a wider range of private entities and not just associations. Fincantieri, recognizing the importance of participating in the industrial consultation processes that lead to definition of the guidelines for research in the maritime field, therefore joined the European WATERBORNE platform at the end of 2017. The WATERBORNE European Technology Platform aims to be the strategic partner of the European Commission in the consensus- building phase of the research priorities in the maritime, naval and blue growth fields. Fincantieri intends to actively participate in the activities of the working groups in order to contribute to the operation of the platform and to promote the strengthening of the maritime sector within the wider European context. Main partnerships in the United States The table shows the Group's collaboration The industrial research association Vessels The American subsidiary Marinette Marine initiatives and partnerships with universities for the Future, co-founded by Fincantieri, has carries out most of its research and innovation and research centres: provided an important meeting point in recent initiatives in collaboration with research years for European stakeholders in terms of centres and universities, through the National defining Maritime Research and Innovation Shipbuilding Research Project (NSRP) funded priorities, and was one of the promoters of by the American Government. NSRP was WATERBORNE's relaunch. Lastly, Fincantieri founded in collaboration with US Shipyards, continues its active support for the efforts of which studies and develops new processes the Italian Ministry of Education, Universities and designs to improve ship production in the and Research (MIUR) on industrial issues United States and make it more efficient. This in connection with the Joint Programming project allowed Marinette Marine to launch Initiative Health and Productive Seas and collaboration initiatives for the development Oceans (JPI Oceans), and the Blue Med - of research projects and innovations with research and innovation initiative for blue jobs important partners belonging to NSRP, such as and growth in the Mediterranean, designed to NSWC Carderock Division, Ship Design USA, focus more attention on Mediterranean issues, Praeses LLC, Newport News Shipbuilding, DRS which is part of the Horizon 2020 Blue Growth Technologies, and BAS Engineering. programme. Also in relation to the latter, the Blue Growth Coordination and Support Action (CSA) continued its work, presenting guidelines to the European Commission concerning new Work Programmes.
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SIGNIFICANT PROJECTS of appendages and studying the calculation innovative plant configurations enabled by models for the introduction of new materials. renewable sources are continuously being Close collaboration with the classification In 2016, a solution was designed for energy analysed and evaluated. bodies, as well as with the shipowners and recovery and the reduction of environmental Specific mention should be given to the the main European research organizations, impacts through a system that produces about reduction of noise emissions, both as allows the Company to identify in advance the 1 MW of electricity using waste heat from vibrations on board and as sound emissions main regulatory innovations that will require diesel engines. In 2017, studies were developed in water or air, produced both by on-board technical solutions specifically designed to to improve the efficiency of this form of energy machinery and by propulsion systems. In this keep product and safety standards well above recovery in a future series of ships. This system regard, specific components that reduce noise the regulatory minimums and guarantee can be considered an evolution of the one have been studied and predictive models have the technical and economic feasibility of the already conceived and implemented on other been developed. In 2017, one of the topics solutions implemented. constructions equipped with a steam developed by the research activities was the turbo-alternator that exploits the heat from reduction of air emissions, which has been Energy efficiency diesel engine exhaust gases. addressed in the various companies of the Fincantieri shares the vision of the European The on-board application of dual-fuel Group, developing generation systems that Commission, which has set the energy engines able to use traditional fuels and anticipate future regulations in the naval field, priorities for the next ten years and the actions liquefied natural gas (LNG) has already been through the study of new power generation to be taken to meet the challenges of energy implemented on a recently built ferry. The and distribution architectures together with saving, achieve a market with competitive experience gained on this prototype will be systems to reduce emissions. For example, prices and strengthen European technological applied to the future cruise ships currently MSC class ships delivered in 2017 have been leadership. The R&I activities developed in being studied, characterized by LNG storage equipped with exhaust gas scrubbing systems 2017 focused on various areas with a view and treatment facilities serving dual-fuel for the removal of sulphur oxides from the to increasing the overall energy efficiency of electric generators whose polluting emissions exhaust gases, a hybrid type able to work the ship. Improvements in the energy balance are greatly reduced. both with sea water and in closed cycle. Also have been studied for both the production in 2017, the exhaust gas treatment systems and storage of electricity, by analysis and Environmental sustainability were further improved with the introduction optimization of on-board energy consumption The sustainability of maritime transport is one of nitrogen oxide abatement systems for and energy recovery and through the correct of the fundamental objectives, included in the Virgin and NCL class ships. These plants will management of heat sources. In particular, in wider context of the greatest global challenges, enable compliance with the lowest IMO Tier III 2017 a research programme was launched in which demand the constant reduction of ships' emission limits. cooperation with the Engine Institute of Naples emissions into the air and the water. In this and the University of Trieste, with the aim of context, the main challenge for Fincantieri is to studying a series of wide-ranging measures select the most effective future technologies to increase the global energy performance of with the greatest potential for application. ships. In parallel, innovative fluid-hydrodynamic Since the ships produced by Fincantieri, and solutions were developed for propellers, in particular passenger ships, must be able hulls and superstructures both in calm sea to operate anywhere in the world, even in conditions and in the presence of wave protected areas, the reduction and treatment motion. In addition, various materials were of effluents into water represents another evaluated to reduce ship weight and improve important technological challenge. This must overall efficiency. Particular consideration be overcome by introducing over the long term was given to optimizing the hull of the ship, innovative technologies that affect wastewater with many projects aimed at reducing the treatment systems (grey and black), bilge hydrodynamic drag associated with improved water and ballast water. Systems and solutions propulsion efficiency, minimizing the impact to free future ships from fossil fuels as well as
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Safety methodology linked to Alternative Design has The main R&I activities developed in Safety is also one of Fincantieri's main drivers gradually evolved, moving beyond the simple 2017 focused on two main topics: the for the development of new technologies, in design of ships, which is already cost-effective, development of solutions for decision particular for cruise ships, following product to encompass individual items of plant and support and the study of technological discontinuities due to the introduction of new equipment (firebreaker shutters, ventilation solutions related to the topic of autonomous international safety regulations (e.g. Safe return ducts, etc.). ships. The area of decision support is to Port). The issue of safety at sea is developed constantly evolving; the activities of the through a holistic approach with the aim of Automation year concerned the in-depth analysis achieving Zero-Accidents at sea. The Fincantieri Group also includes among its of some particular aspects, including In this extremely important area, the human subsidiaries Seastema, a company specializing the development of a decision support factor is the fundamental component for in the field of controls and automation, which system for managing ship stability in the limiting, mitigating and resolving emergencies operates both nationally and internationally. event of damage, a support system for at sea. Furthermore, the development The topic of autonomous navigation is Collision Avoidance and for the recovery of sophisticated systems for monitoring increasingly emerging as one of the most of a man overboard. Regarding the topic and controlling ship's performance and important technological trends in the naval of "unmanned" vessels, several projects systems, allow us to provide fundamental field. To improve its positioning on the market, have been set up aimed at developing support during the decision-making phase the Group is investing in enabling technologies different types of vessels for air, surface of emergencies. The main R&I activities for the "unmanned" management of ships. In and submerged use. Additionally, measures developed in 2017 focused on improving this regard, the Company's R&I team has set were implemented to ensure the security of the control of ship manoeuvrability in any itself the following objectives: communication networks (cyber-security), operating condition and the management vessel and personal safety at sea, and of on-board systems even in the case of • increase the pervasiveness of automation environmental protection. accidental events. A second topic that was systems, integrating new sub-systems/ In 2017, some results of the R&I activities developed is the continuous monitoring of functions; in the automation field were applied to the the ship and the on-board systems in order • evolve decision support systems, moving most recent orders. In particular: to continuously check the state of efficiency, from a "passive" system that limits itself to anticipate possible malfunctions and facilitate alerting the operator of any critical issues to • advanced autopilot for automatic preventive management of maintenance an "active" system that offers the operator navigation, in normal conditions and in war operations on board. Since coming into force an action to mitigate the reported critical situations, for the Offshore Multi-purpose in 2002, the SOLAS II-2/17 and III/38 rules on issue; Patrol Vessel (PPA) project enacted by the alternative design have increased the technical/ • increase the intelligence in the system, latest Italian Naval Law; economic design opportunities, leaving more both in controlling on-board systems and • simplified version of the advanced room for both the designer, the manufacturer controlling navigation and manoeuvre autopilot, for the automatic maintenance of and the customer. Even though it is expensive systems; the route both for the Logistic Support Ship in terms of time and resources, this method • improve land-to-ship integration, for (LSS) and for the Landing Helicopter Dock allows the creation of innovative solutions, and monitoring/services from land, as well as (LHD) recently ordered by the Italian Navy; thanks to a tailored design approach, it ensures the management, performance analysis and • Land CBM for the ATX ship automation a degree of safety that is even higher than optimization of plant operations; on the project for the South Korean Navy. that required by prescriptive rules, with great basis of land data ("big data"); benefits in terms of quality of the final product. • examine the issues related to cyber- The adoption of alternative design techniques security of both on-board networks and also increases the degree of flexibility in land-to-ship communications. design and favours the immediate application of technological innovations. Over the years, with the experience gained, the Fincantieri
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Competitiveness of products and processes spaces by introducing the largest outdoor Close relationships and long-term 360-degree promenade ever built on a ship. partnerships allow us to maintain contact The subsidiary VARD will also build the and relations with key customers, ensuring firstarctic cruise ship (Polar Class 2) with the maximization of product performance liquefied natural gas (LNG) propulsion. and its perceived quality. This makes it On the other hand, in the military field, possible to identify areas that are important the logistic support ship set up in 2016 for to the client, also associating them with the Italian Navy is equipped with health a level of perception, satisfaction and capabilities thanks to the presence of a importance. Furthermore, Fincantieri's fully equipped hospital. Moreover, the positioning depends on its ability to maintain submarine Romeo Romei, delivered in May the high quality of the final product at a 2017, features highly innovative technological cost that is competitive on the market. With solutions and is entirely made of non- this in mind, the ship is designed and built magnetic material. to maintain the highest quality standards and the best overall lifetime cost profile, thanks to an overall analysis of the Life- Cycle-Performance. In particular, the Voice of the Customer (VoC) analysis is defined starting from the relationship with the client concerning R&I topics. This analysis intersects with the process for managing innovation with suppliers, during which the main technological systems of the ship product are identified and the technological roadmap is defined. The main R&I activities of 2017 were focused on the development of new concepts both for ships with new operational features and for new systems (engines, turbines, appendages, etc.), for the reconfiguration ofnew system architectures and the introduction of new materials. In the early design phase, IT tools were developed to enable a better definition of the final product. During the design phase, the topic of standardization and modularization of specific on-board systems was addressed, aimed at reducing design and production time and costs, and 3D and virtual reality technologies were studied to identify solutions both for the benefit of the designer and to make the project under development easier to view. In the cruise field, the recently delivered MSC Seaside presents solutions that increase the number of cabins and open
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C USTOMERS AND PRODUCTS
OUR CUSTOMERS
PRODUCT PORTFOLIO
QUALITY POLICY AND ASSURANCE
CUSTOMER SATISFACTION AND RETENTION
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Listening to customers to combine tradition with innovative solutions
Fincantieri is a player with consolidated CRUISE The customers who purchase cruise ships produced by the Merchant Shipping Division of FINCANTIERI S.p.A. and VARD are the leading cruise operators in the world. The customer portfolio has expanded considerably over the last few years, thanks to the ability to design and leadership positions in the shipbuilding CUSTOMERS build widely differing types of cruise ship, with strong customization by customer, geographical area and market segment served. industry. In addition to its carefully maintained leadership in the cruise sector, Fincantieri achieves outstanding performance
in various sectors of the shipbuilding industry, The customers who purchase the products of the Naval Vessels Division of FINCANTIERI S.p.A. and Fincantieri Marine Group are such as offshore, mega yacht construction, government entities, both Italian and foreign, including the Ministry of Defence, the Navy, the Coastguard and all entities appointed to NAVAL make acquisitions in the Defence sector. CUSTOMERS maintenance and refitting, mechanical systems and component design, all of which contribute to a dynamic and very competitive industry that places our country among the top rankings in the world. Ferries designed and built by FINCANTIERI S.p.A. and VARD are intended for private and public clients, both Italian and FERRY foreign, operating in the Mediterranean, the North Sea and the Baltic Sea, and meet the most demanding requirements in CUSTOMERS this sector in terms of technological innovation, low environmental impact, energy saving and diversification. OUR CUSTOMERS
One of the keys to the success of the Fincantieri Group is strong diversification of its activities by The mega yachts designed by Fincantieri are intended for private customers MEGA YACHT final market, geographical area and customer who fall into the category of ultra high net worth individuals. CUSTOMERS portfolio.
The customer portfolio for repair and transformation services includes: REPAIR AND • cruise ship owners; NAVAL • shipowners from the offshore segment with vessels operating in the Mediterranean area and West Africa; • shipowners for ferries and other types of vessels; CONVERSION • private owners of mega yachts with vessels moored in the Mediterranean area; CUSTOMERS • shipowners active in the merchant sector working with ships in the Mediterranean and the Great Lakes area.
The main operators of the Group's offshore division are shipowners and charter companies that provide logistical support and services for the establishment and operation of offshore facilities for companies active in the Oil & Gas industry. These also include large contractors specializing in offering turnkey services for the commissioning of large projects and offshore infrastructure, as well as the main drilling OFFSHORE contractors specializing in the management of semi-submersible drilling vessels and platforms. In addition to the design and production of offshore support units, VARD also supports the production of special vessels such as ferries CUSTOMERS powered by liquefied natural gas (LNG) or hybrid (battery) systems, mainly for shipowners in Northern Europe, and vessels used by customers active in the aquaculture sector and icebreakers.
The Group offers its naval systems and components to the internal captive market and to other shipbuilders and industrial operators SYSTEMS AND (such as, for example, engineering companies active in the installation of power plants as well as companies responsible for carrying out complex projects, for instance in the Oil & Gas sector). The main customers of these systems and components include the customers of COMPONENTS each of the other business sectors, both civilian (owners of passenger ships) and military (i.e. Italian Navy, US Navy, etc.). In addition, the CUSTOMERS main customers include shipbuilders such as the Meyer Werft and Naval Group and industrial operators such as Saipem among the EPC contractors, and Cofely, Vinci Construction and Atzwanger among the industrial operators.
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The table summarizes the main Participation in exhibitions brand in the reference markets, and can be customers by business segment: Participation in trade shows is a very an opportunity to communicate the launch important activity for the Group as it of new products. FINCANTIERI S.p.A. took provides direct contact with customers and part in 15 exhibitions in 8 countries in 2017. CUSTOMERS DIVERSIFICATION LONG-TERM CLIENT RELATIONSHIPS NEW CUSTOMERS suppliers, reinforces the consolidation of the (1) Ships delivered since 1990 2002 TODAY Vessels in order book (1)
29 November / 1 December WORK BOAT SHOW 20-22 June ARLINGTON (2) - USA - POWERGEN EUROPE CRUISE 63 11 74
>25 YEARS 27-30 September 10-12 January MONTECARLO YACHT SHOW NEW ORLEANS Surface Navy Association - USA - National Symposium ABERDEEN MONACO - REGNO UNITO - - PRINCIPATO DI MONACO - COLONIA - GERMANIA - 5-8 September Guardia MM MM WASHINGTON OFFSHORE EUROPE Costiera Qatar Emiri - USA - Italiana US Navy MM Italiana Italiana Naval SINGAPORE Italiana Forces Qatar Emiri US Coast U.A.E. 3-5 April Guardia Naval Guard Navy NAVY LEAGUE SAS Costiera Forces 36 13 49 Bangladesh 6-9 April Italiana Coast Guard SINGAPORE BOAT SHOW Turkish Algerian Iraqi NAVAL Coast >50 YEARS Navy Navy Guard US Navy U.A.E. Bangladesh US Navy (3) Navy Peruvian Indian Coast >30 YEARS Navy Navy FORT Guard US Coast LAUDERDALE - USA - SIDNEY Guard US Coast - AUSTRALIA - Armed (3) Kenya Kenya Guard >20 YEARS Forces of Navy Navy Malta 13-16 March SEATRADE CRUISE GLOBAL 3-5 October PACIFIC 2017 1-5 November HOUSTON - USA - ABU DHABI RAVENNA - EMIRATI ARABI UNITI - Fort Lauderdale - ITALIA - DUBAI International Boat Show - EMIRATI ARABI UNITI - (4) 29-31 March 28 February / 4 March RIO DE Offshore Mediterranean Conference DUBAI BOAT SHOW JANEIRO OFFSHORE 58 2 60 1-4 May - BRASILE - Offshore Technology Conference >20 YEARS 19-23 February IDEX/NAVDEX 4-7 April LAAD DEFENCE & SECURITY (5) (5)
(1) Updated at 31.12.2017. (4) DOF includes: DOF, DOF Subsea, Norskan Offshore, DOF Deepwater, Techdof (2) Including the MOA signed in Q4 2017 for 1 vessel for Cunard. Brasil and Dofcon Navegação. (3) Through the subsidiary Manitowac Marine Group (now (5) Through the subsidiary VARD. Fincantieri Marine Group).
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PRODUCT PORTFOLIO Cruise ships involved in the development of international A cruise ship is an ideal and self-sufficient regulations, are carried out in close Our historic ships floating city that communicates constantly collaboration with the Italian Flag Agency, the with land. It is designed, built and managed Classification Bodies, the sector's Industrial KAISER FRANZ JOSEPH to safeguard the health and life of those Associations, the Shipping Companies and the 1912 Monfalcone temporarily living there for work or fun, main international research bodies. Monitoring The largest ship ever launched in the Mediterranean thousands of people from different countries of regulatory developments is therefore a and cultures, who live together and comply fundamental element, at a strategic and SATURNIA with its rules of governance. For this reason, technological level, in identifying in advance 1927 Monfalcone DUILIO the Group has an active and proactive role the possible trends in the market and being The first ship with balcony cabins 1923 Genova Sestri in the development of international safety able to anticipate the emergence of new needs The first Italian regulations. Fincantieri is a accredited by proposing solutions that are innovative, ocean super-liner AUGUSTUS 1927 Genova Sestri representative with the International Maritime competitive, and comply with the technical The first ship with Lido bridge Organization (IMO), the specialized United and economic feasibility standards at the and outdoor pool Nations Agency for protecting the safety product and process level. VESPUCCI of human life at sea and the environment. 1931 Castellammare di Stabia CONTE DI SAVOIA The largest training 1932 Trieste The activities of the Group, which is directly ship of all time The first ship equipped with stabilizers THE NUMBERS OF COMPLEXITY - What you need on average to build a cruise ship
RAFFAELLO MQ OF PUBLIC SPACE: KMs OF CABLE: 1965 Trieste THE SIZE OF THREE MORE THAN 7 TIMES HOURS OF The last ocean liner built FOOTBALL FIELDS THE DISTANCE FROM SHIPYARD WORK in Italy (Michelangelo ROME TO VENICE 3,800 and Raffaello 22,000 are twin ships) VICTORIA EUGENIO C. 135,000 DESIGN HOURS 2,000,000 1931 Trieste 1966 Monfalcone The first air-conditioned ship The first Costa REX cruise ship 1932 Genova Sestri The first ship with spa and tanning beds. The Fincantieri ships represent a technological standards of comfort on board. fastest ocean liner in the world (30 knots) benchmark at the European and global level. In its strategies, the Fincantieri Group has MICHELANGELO OCEANIC They feature the most advanced technologies, embraced the objectives of the International 1965 Genova Sestri 1966 Monfalcone with technical solutions that provide Maritime Organization, summarized in the The last ocean liner built in Sestri The first cruise ship energy equipped with savings, emission reduction, high performance slogan "Safe, secure and efficient transport on magrodome and high quality, guaranteeing very high clean oceans".
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Sustainability in the cruise sector I. Energy saving and reduction of carbon
The environmental impact of cruise ships today dioxide emissions (CO2) is potentially high. The regulatory framework, The Energy Efficiency Design Index (EEDI) is with regulations at a global and local level, the main regulatory reference for measuring requires a rapid reduction of emissions into the energy efficiency. Lower values of the index air and water. The reduction of environmental correspond to greater energy efficiency. impact has become one of the most important Regulations impose a decrease in values drivers for design and innovation in the field of over time. cruise ships. Below is a graph that represents the provisions of the regulations on the index values, divided into time phases by type of ship.
22
21
20
19
18
17
16
15
EEDI 14 Fincantieri has developed, validated and applied • systematically reducing the energy needs of 13 on its ships more than 100 initiatives aimed at: users on board. 12 The recent 11 Fincantieri projects • improving hydrodynamic and propulsive Below are some examples of energy saving anticipate the EEDI efficiency; solutions: 10 values slated for • exploiting waste heat (fumes and cooling application 9 in 2019-2020 water) with recovery and cogeneration systems; 8
7
6 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Size (GRT)
- Phase 0-1 Jan. 13/31 Dec. 14 - Phase 1-1 Jan. 15/31 Dec. 19 - Phase 2-1 Jan. 20/31 Dec. 24 - Phase 3-1 Jan. 25/going forward Existing ship
The regulations impose decreasing EEDI values over time.
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II. Reduction of harmful air emissions harmful emissions are applied, and which The VARD Group has contracts and offers for However, there are critical issues related The International Convention for the Prevention coincide with the main operating areas of the various units equipped with electric batteries to this technology: in general, the of Pollution from Ships (MARPOL) requires a cruise industry. European legislation (Directive to cover all or part of the energy requirements technologies/systems added for the progressive reduction in emissions of harmful 2012/33/EU) sets further emission limits, of small/medium-sized vessels. protection of the environment occupy gases, in particular sulphur oxides (SOx) and particularly in port areas. From the design and operating point of view, volumes previously used for the payload. nitrogen oxides (NOx). The constraints are we can distinguish two types of use of the In particular for LNG, accommodating growing over time, and they are particularly battery modules installed on ships: the tanks on board (in addition to the stringent in Emission Control Areas (ECA), liquid fuel tanks) and installing the related where the most stringent values for reducing • supplementation of the electric power operating and safety systems entails a supplied by the batteries with a traditional significant reduction of the useful space ECA AREAS generation system (similar to the concept on board. The development of a logistics of hybrid cars): the energy supplied by the system capable of ensuring the availability batteries is used either exclusively in particular of LNG (including intermediate storage situations (e.g. in port) or supplemented by the and bunkering systems) in all major cruise on-board diesel engines at times of maximum destinations is still at a preliminary stage. power demand (e.g. maximum speed At present, a cruise ship operating on LNG navigation). In particular, VARD is delivering would have a limited area of operation. two ferries to the Norwegian operator The future lies in the application of Torghatten Nord and a dual-powered electric fuel cells, electrochemical conversion hybrid cruise ship with icebreaker features, devices that generate electricity and equipped with high capacity batteries and LNG heat by combining a fuel (typically storage on board; hydrogen, methanol or methane) and • use of electric batteries to cover the entire a comburent (oxygen), in the absence load on board (hotel and propulsion): VARD of combustion. In this way, no polluting will install this system on the recent order for substances are actually produced. After a 70-metre bidirectional ferry operating on a the initial development phase, linked to fixed route between the two sides of a fjord. space exploration and the naval field (submarines), terrestrial applications for ECA AREAS - EXISTING ECA AREAS - FUTURE POTENTIAL Below is a table that summarizes the emission the generation of electricity and propulsion impact by type of power supply: (for example prototype trains fuelled by fuel cells) are spreading. Studies and The currently most common configuration and hybrid scrubber), all aimed at reducing the research are being carried out on their for emissions reduction is based on latest sulphur oxide content in the fumes. application for generating energy for generation diesel engines with the installation cruise ships. of fume purification systems in the exhaust The near future brings definite environmental systems: advantages with the use of LNG through dual fuel diesel engines. The technical issues • NOx reduction: "catalytic muffler", in which related to the construction of passenger ships the nitrogen oxides are made to react with powered by LNG are now being resolved and urea in a high-temperature process, obtaining consolidated. Fincantieri has already built a
pure nitrogen (N2) and water vapour; special ferry for Canada and is designing large- • SOx reduction: "Scrubber", i.e. fume scale gas ships. scrubbers. There are various applied technologies (wet, dry, open cycle, closed cycle
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III. Complete treatment and storage of liquid • pelletizing, storage of waste for subsequent avoid contamination with species from different necessities, which is influencing the current use and solid waste unloading in port. ecosystems. Modern cruise ships are equipped of the fleet and the way in which the renewal Waste treatment is regulated by MARPOL with the latest generation of ballast treatment process is taking place. The new constructions are (Annexes I, IV, V). The increasingly stringent The processes for liquid waste are: systems, based on the pre-filtering of plankton designed right from the preliminary phase of the regulations in force in areas with a strong and subsequent sterilization with ultraviolet rays. project to be flexible, modular and reliable, with cruise vocation, such as Alaska, determine the • physical and biological treatment (in line low environmental impact, easily reconfigurable characteristics of the latest generation cruise with the best "land" standards) of all on-board Naval vessels and upgradable. In the event of an operation ships. Only bacteriologically and chemically pure wastewater (sewage, grey water, kitchen effluents Also for military vessels, Fincantieri follows a to support populations affected by a natural water can be discharged into the sea (under and laundries); procedure for the design of eco-sustainable ships, disaster, the new vessels will be able to provide certain conditions). Any other residue must be • storage of purified water; in order to reduce the environmental impacts drinking water, electricity and health support stored on board and unloaded in port for further • thickening and drying of residual sludge for both during the construction phase and the through its own hospital facilities. In addition treatment. subsequent unloading in port. operational life of the ship. to the particular attention giving to reducing The processes for solid waste are: The renewal process for the Italian Navy fleet emissions of fumes, the treatment of wastewater IV. Ballast water treatment has a distinctly dual approach, typical of the and the use of bio-fuels, the vessels will be able to • collection, dehumidification, kitchen waste The ballast water treatment regulations, Armed Forces. The Navy is often engaged in intervene to contain a contaminated tract of sea, treatment; International Convention for the Control and non-military tasks such as aiding populations with the possibility of collecting and stowing the • sorting and recycling of hotel waste; Management of Ships’ Ballast Water and affected by natural disasters, monitoring polluting substances. • compaction and/or incineration (where Sediments (BWM 2004), require ships to and protecting archaeological heritage, and permitted) of solid waste; sterilize ballast water before discharging it, to transporting humanitarian materials and basic
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The following is a list of eco-sustainable design Below is a summary of the main awards criteria for the construction of naval vessels: obtained by the ships produced by Fincantieri:
SHIPBUILDING Aircraft Carrier Cavour: most powerful non-nuclear CRUISE propulsion system
NAVAL
Carnival Vista: "Eco Notation" by Lloyd's Register for exceeding environmental standards
OFFSHORE Royal Princess: 1st cruise ship fully compliant with the new regulations
The mission of these cross- sectional activities is making sure that all ships provide the best economic (savings) and technical (environmental, safety, etc.) performance. Far Samson: most Normand Maximus: the largest powerful offshore vessel offshore vessel ever built in Norway Skandi Africa: Ship of the Year 2015 AMC Connector: the EQUIPMENT world's largest cable layer SYSTEMS & SERVICES
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QUALITY POLICY AND ASSURANCE Quality assurance at each stage of the process, In 2017, the boundary of the Italian certified Department: new ISO 9001:2015 certification from the acquisition of the contract to the design organizations expanded thanks to the integrated with ISO 27001; Aware that the complexity of its business and procurement, down to the production or achievement of ISO 9001:2015 certification by • Issel Nord S.r.l., acquired in 2017, a company requires high standards in terms of quality, cost provision of the services, is entrusted to each the following organizations: highly specialized in Integrated Logistic and time of products and services offered, process owner. Support services for civil and defence Fincantieri has adopted a Quality Policy able • Fincantieri Infrastructure S.p.A.: new companies, already certified ISO 9001:2015. to convey the commitment of the Group's certification; resources on specific key points. The goal is to • Services Division: extension of the scope of Below is a summary of the 22 ISO 9001 achieve and maintain an excellent level of quality the ISO 9001 certificate to the Genoa Basin certifications as at the end of the year obtained in strategic choices, business processes and and to the logistical and post-sales support in Italy: every activity. activities of the naval section; Every Company or Division adopts a Quality • Parent Company Information Technologies Management System (QMS), certified according to the ISO 9001 standard, which ensures compliance with the best standards.
CLARITY OF OBJECTIVES
EFFECTIVE PLANNING CONTINUOUS IMPROVEMENT
The 7 points of QUALITY AS THE Fincantieri's quality SOURCE OF QUALITY policy PREVENTION OF INFORMATION
RIGHT QUALITY OF FIRST TIME PEOPLE AND RESPONSIBILITY
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With regard to the VARD Group, all activities Below is a summary of the 14 ISO 9001 Quality monitoring gives rise to mechanisms for reviewing the are carried out in accordance with the Health, certifications obtained by the VARD Group as In Italy, the Quality Management System is also projects; in the case of shipbuilding, the Safety, Environment and Quality (HSEQ) of at 31.12.2017: applied to job orders, whether they be naval or analyses trigger the processes of continuous the Group, whose principles and strategies are other products, through the Job Quality Plan, a improvement, in order to ensure that the same based on ISO standards. set of documents and Control Plans attached errors are not repeated in subsequent jobs. A to the contract, which governs all aspects closing report/booklet is produced, with the related to Quality Control and Assurance valid main lessons learned, in order to extend the for the job in question. It guides the operating countermeasures to the various types of errors structures in the correct design, construction and the resulting prevention and improvement and testing of the product. actions to other operating sites. Fincantieri regularly monitors quality indicators, at a Job quality plan divisional level (for homogeneous business • object of the project; areas) and at production level: • main characteristics of the job; • applicable documents: • shipbuilding sectors (cruise ships, naval • for the project; vessels, mega yachts), are classified by job • rules, laws and regulations; and by construction, which allows detailed • quality system standards comparisons to be made with regard to and procedures; homogeneous "objects" and "phases"; • standard to be applied; • in the plant and components sector (for • organizational aspects: example diesel engines, turbines, naval systems • organization and resources and systems, cabins for passenger ships), for the job; the classification is by production process, • interfaces and communications; facilitated by repetitions in small and medium- • control and inspection plans. sized series.
All ships are delivered with a Green Passport When designing and building complex The quality indicators and the achievement and Clean Design Notation certification, in products and systems, such as cruise ships, of the related annual objectives constitute a accordance with the provisions of the Hong military submarines or industrial diesel engines, fundamental part of the incentive programmes Kong International Convention for the safe and there is always the possibility that the process of the entire Fincantieri organization. environmentally friendly recycling of ships, may be subject to deviations from standards, From 1996 to 2017, the Group's divisions and which contains information on potentially design changes, unexpected events and supply companies were subjected to official audits by hazardous materials used in the construction or execution errors. These "non-quality" events the RINA certification body, with consistently of the ship, its equipment and its systems. are normally detected and tracked by internal improving results in terms of the main findings. structures, by the customer's inspection staff Regarding the management of military orders, The American shipyard of Fincantieri and by the Classification Bodies, or more during 2016 three audits were carried out by Marinette Marine also achieved ISO 9001:2015 rarely after delivery, with interventions in the the Government Quality Assurance of the certification. guarantee and after sales period. Italian Navy (AQG), which involved the FREMM The remedial actions follow the industrial and Naval Law Programmes. practice that involves increasing costs/times to adjust, repair, redo and replace in order to minimize the impact for the customer. The quantitative and qualitative analysis of these events, appropriately recorded and classified,
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CUSTOMER SATISFACTION AND RETENTION
The main sector in which Fincantieri operates is intrinsically characterized by a limited number of competitors and customers. The measure of customer satisfaction and retention cannot therefore be based on significant data and statistical samples. It requires instead a long-term analysis of the relationship between market trends, assignment of orders and jobs to the various players, the time taken to transform negotiations into orders, the maintenance of historic customers, and the acquisition and retention of new customers. Fincantieri regularly surveys the market and the competition, from which certain "loyalty" factors can be deduced. In Italy, 5 new ships and a submarine were delivered in 2017. For 4 of these, the remarkable "zero defects" result was achieved, a significant recognition by the respective customers. As a side note to the MSC Seaside delivery, the shipowner company stated that the ship's quality exceeded all expectations. The new orders obtained in 2017 confirm the customer satisfaction. As for Fincantieri Marine Group, customer satisfaction is surveyed three times a year through meetings with representatives of Lockheed Martin and the US Navy. These sessions cover the following areas: technical, testing, planning, quality, after-sales and ILS (Integrated Logistics Support). During these sessions, the Company receives feedback on the degree of customer satisfaction and on any problems. The corrective actions are defined at that time, with subsequent follow-up.
At VARD, Customer Satisfaction is monitored periodically, and from the time of delivery to the end of the guarantee and after sales period, each product is subject to voluntary feedback by customers.
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S UPPLY CHAIN
CHARACTERISTICS OF THE SUPPLY CHAIN
SUPPLY CHAIN MANAGEMENT
CHARACTERISTICS AND MANAGEMENT OF THE SUPPLY CHAIN OF FOREIGN COMPANIES
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Fincantieri manages complexity CHARACTERISTICS OF THE SUPPLY CHAIN The chart below highlights the geography As regards the Italian activities, Fincantieri acts through monitoring of an of the various activities in the shipbuilding as leader and group hub for a large number increasingly responsible and The Group actively manages its make-or-buy process: of Small and Medium Enterprises (SMEs), a an transparent supply chain procurement strategies for every single phase of important factor in the flexibility and wealth supervision development and implementation of the naval creating capacity of local production systems, job. For the characteristics of the production allowing them to access projects of great Fincantieri is a highly complex industrial process, Fincantieri comes into close contact breadth and value, taking on a global market entity, focused on high value-added with its suppliers, who during the shipbuilding FINCANTIERI VARD they would otherwise be excluded from due segments with high engineering content. phases often work in the same production to their small size. The Company supports a The Group produces ships that are not facilities that host the ship's construction. large network of highly specialized Italian SMEs standard vessels, but tailor-made products, Considering the critical value linked to external Design in various macro-sectors (furniture suppliers, created specifically to meet customer supplies, the purchasing process receives great air conditioning systems, electrical/electronic expectations. This makes Fincantieri one of attention for each shipbuilding project and is systems, etc.). the most dynamic and diversified operators therefore managed internally through special in the industry, and is reflected in the supply structures belonging to the operating divisions or In particular, Fincantieri, through its shipyards, DESIGN DESIGN chain, an integral part of the business model. the central divisions of the Group. is able to contribute to the maintenance and Italy - Usa Norway development of the industrial system of the regions in which it operates. Assembly and pre-outfitting FINCANTIERI SUPPLY CHAIN Over 85% 5,000 € 4.8 bln Italian companies Companies DESIGN in issued (4.1 bln involved mostly orders HULL HULL euros) SMEs PRODUCTION PRODUCTION Italy - Romania Romania PURCHASING
RAW COMPLEX SEMI-FINISHED MATERIALS COMPONENTS GOODS TURNKEY
PRODUCTION HULL HULL PRODUCTION AND PRODUCTION AND PRE-OUTFITTING PRE-OUTFITTING OUTFITTING ASSEMBLY Italy - Usa Romania - Vietnam Brazil Outfitting and PROJECT MANAGEMENT sea tests
A significant portion of a ship, about 80%, is engineering of the ship to the construction of OUTFITTING OUTFITTING Italy - Usa Vietnam made with the contribution of suppliers. the hull and the outfitting, coordinating a wide Brazil - Norway Fincantieri operates as a system integrator, network of specialized suppliers and ensuring taking responsibility for the shipbuilding the integration of the key components within project as a whole. The Group takes care the platform. of all the processes, from the design and
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In 2017, the growth trend in purchasing volumes • review of the planning criteria, performed early SUPPLY CHAIN MANAGEMENT was confirmed, despite relative stability in the compared to the traditional approach of some docks employment programme. processes (including the purchase process) FINCANTIERI S.p.A. monitors its own This phenomenon is essentially due to two factors: that would otherwise have been developed supply chain through a management subsequently. process with a life cycle approach, aiming • the stabilization of the production structure to minimize the environmental and social based on sections, which involved bringing As for the non-cruise business, there is the strong impact of a product or service along its forward the procurement of some orders and non-recurring impact of the multi-year contract life cycle. This is a departure from a model PRODUCTION WITH PROCEDURES - ENVIRONMENTAL CRITERIA increasing overall capacity in terms of Gross carried out in collaboration with Leonardo, that sees the environmental and societal Tonnage (GRT)/year, with clear impacts on the for which about half of the value of the entire impact solely of the production activities, annual growth of orders; programme in terms of order intake has already and instead widens the analysis of the been issued. possible negative externalities to all links of the chain. To this end, Fincantieri believes SUPPLIERS BY PRODUCT CATEGORY above all that close collaboration with CONSIDERATIONS ON ENVIRONMENTAL CRITERIA - its supply chain is essential to achieving GREEN ALONG THE SUPPLY CHAIN VALUE OF ORDERS ISSUED BY CATEGORY IN MILLION OF € high quality levels in the finished product 4,866 and the entire production process. The ultimate goal is therefore to establish 3,387 long-term partnerships characterized by transparency and collaboration. The RAW 2,754 creation of partnerships, the dissemination MATERIALS and sharing of best practices throughout TRANSPORT the supply chain, and cooperation in
1,334 1,229 1,265 various areas are some of the ways in which the Group involves its business partners.
371 402 338 337 The suppliers must not only meet the 74 72 42 36 minimum requirements of safety, quality No. OF SUPPLIERS 448 391 2,483 2,940 279 2941,428 1,522 292 364 139 1135,069 5,624 and financial soundness so as to minimize TURNKEY SUPPLY CONTRACTS SERVICES INVESTMENTS ENGINEERING TOTAL potential operational disruptions and unexpected costs, but must also guarantee PRODUCTION 2016 2017 the integration of environmental and social SUPPLIERS BY GEOGRAPHICAL AREA sustainability considerations. Fincantieri PACKAGING operates in a framework of fair competition VALUE OF ORDERS ISSUED BY COUNTRY/AREA IN MILLION OF € 4,866 with honesty, integrity, fairness and good 4,156 faith, respecting the legitimate interests of 3,387 all stakeholders. The Code of Conduct of DISTRIBUTION the Group contains the principles and rules 2,696 that all those operating in the Company are required to respect, and dictates the rules to be followed also with suppliers. From this INSTALLATION AND point of view, therefore, suppliers are asked END-OF-LIFE to comply with certain requirements: 633 638
46 56 12 13 0.2 2 0.005 0.5 No. OF SUPPLIERS 4,417 4,869 530 624 79 92 36 30 6 5 1 4 5,069 5,624 ITALY REST OF NORTH ASIA OCEANIA OTHER TOTAL EUROPE AMERICA COUNTRY The data refer to FINCANTIERI S.p.A. and to the Italian subsidiaries. 2016 2017
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Furthermore, in order to prevent any SUSTAINABILITY REQUIREMENTS managing safely the activities of the human possible infiltration of organized crime in SUPPLIER QUALIFICATION PROCESS FOR SUPPLIER SELECTION resources employed to carry them out, the procurement phase, in investments as well as complying with the regulations and in production activities, the Group has Innovation governing behaviour also within the established a stronger cooperation with 1 Innovation is at the centre of Fincantieri plants. the local competent Prefectures, stipulating INFORMATION 2 entrepreneurial activity: a distinctive Legality and Transparency Protocols, merged REQUEST AND feature of the ships we build is the high Environment since 2017 into a National Protocol (for more COLLECTION technological content. The continuous Fincantieri recognizes a policy of choices details see the chapter Responsible Business PREQUALIFICATION adaptation to new conditions and the aimed at environmental protection as Management/Our Rules). Experience at constant search for better solutions for a priority in compliance with national, the local level has shown that these tools our customers are the values that guide international and industry regulations, have significant value in terms of ability the Company and its suppliers in their and for this reason it adopts a preventive to anticipate the audit thresholds and, 3 everyday work. See also the chapter approach, requiring its suppliers to adopt consequently, anti-mafia prevention. They VISIT TO THE Research and Innovation. attitudes and choices that are equally strengthen the monitoring network and allow SUPPLIER 4 responsible along the entire supply chain. controls to be extended to supplies and Quality services otherwise excluded from the anti- QUALIFICATION Suppliers are selected on the basis of Responsibilities mafia precautions. a strict qualification process, aimed at Fincantieri's guiding principle is that of guaranteeing product quality, safety and acquiring the necessary goods/services Selection process and environmental protection, compliance with the best quality/price ratio to meet the qualification of suppliers with timetables, achievement of economic objective of containing costs and ensuring The management, maintenance and objectives, customer satisfaction, and the quality and service levels appropriate to the continuous improvement of a reliable supplier A continuous performance evaluation system image of the Company. The assessment satisfaction of the end customer. base capable of assisting Fincantieri in has also been implemented (in which all the parameters concern the technical, It must also take into account operational achieving its economic and sustainability relevant company departments take part) in productive and service capabilities, risks and comply with general guidelines objectives are based on a rigorous process order to guarantee the required standards over financial soundness, quality business on the environment, occupational safety of qualification and monitoring of the time. systems and safety management. The and the overall sustainability of its choices performance of strategic suppliers. Through the use of specific purchase methods supplier must ensure that the entire value in terms of social impact. Fincantieri Fincantieri believes that the selection of adapted for the different product categories, chain is subject to an adequate quality expects suppliers and subcontractors to innovative and reliable partner suppliers, willing Fincantieri strives to obtain the best conditions management system (QMS). assume their responsibilities throughout to build together a common success starting in terms of performance, price and quality, the entire end-to-end supply chain, from from a high value-added, commitment and throughout the entire life cycle of the product. Health and safety manufacturer to supplier to end-user, to flexibility is the fundamental requirement for Occupational health and safety is an comply with safety and environmental a lasting relationship. The goal is to establish essential value for the Fincantieri Group regulations and therefore to maintain long-term partnerships characterized by and a priority in corporate decisions also conduct that respects the values that guide transparency and collaboration. Development, in its relations with suppliers. These must the Company. growth and efficiency start immediately at in turn play an active role in the field of the supplier selection phase, which follows a protection and safety at work and they documented procedure in order to guarantee must commit to spreading the culture of impartiality and equal opportunities for all the safety at every level and in every corporate parties involved. setting. This commitment must have a concrete effect on the workplace in
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The supplier, as component specialist, is All suppliers can ask to participate in FINCANTIERI SUPPLIERS increasingly involved in the initial phase the selection process regarding Italy by SUPPLIER MONITORING An e-procurement system is available of the project in order to share technical registering on the Fincantieri Suppliers (www.fincantieri-suppliers.com) with and economic commitments with the final portal, following clear and precise rules. which Fincantieri and the system-enabled customer. suppliers communicate quickly and 1 Of the 823 qualified strategic suppliers at environmentally. 2 the end of 2017, 82% were subject to an MONITORING The system is used for: evaluation, with the following results: SUPPLIERS CRITICAL ISSUE EVALUATED MANAGEMENT • requests for offers, which are made • 89% satisfactory; available to selected suppliers in digital • 10% with some independently 82% format, to which they can respond by recoverable gap; sending their economic and technical • 1% with serious problems, improvement plan 3 offers on the same platform; or replacement. • purchase contracts, which are digitally ACTION MONITORING 4 SUPPLIERS signed and made available electronically to suppliers who in turn can accept them SUPPLIER OVERSIGHT directly on the system without printing MEETINGS and sending paper to Fincantieri.
Using the e-procurement system saves a lot of time, transport costs (and related emissions of CO ), printing and use of 2 Fincantieri ensures monitoring of paper throughout the procurement The data refer to FINCANTIERI S.p.A.. performance that allows suppliers to maintain process. their qualified status and manages any critical issues. Systematic monitoring of the performance of qualified suppliers is carried out through specific scorecards. A supplier remains qualified as long as the reasons Fincantieri is sharing with its suppliers an for its inclusion in the Register of Suppliers improvement and optimization path for continue to exist and until the monitoring the procedures that regulate subcontracts, of its performance is considered critical to to create a greater responsibility of the the point of expulsion. The supplier portfolio subcontractor and guarantee growth for is recognized as an important asset of the the supplier and a higher quality of the entire Company. Therefore, the procedure activities carried out for the Company. In this for managing the Register requires that the regard, the Fincantieri-supplier relationship main problems are examined through cross- is governed in such a way as to eliminate any involvement within Supplier Oversight, the conflicts of interest. Fincantieri is working body that gathers the different functions to avoid situations of dependency with and business units of the company and takes its suppliers, aiming not to operate under decisions resulting based on examination of any supply monopoly in the same product these critical issues. The supper qualification segment. and performance monitoring process is focusing increasing attention on aspects related to safety and protection at work
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both in the document collection phase and recent company agreements. In the same period, the shipyards hosted 20.5%. In the field of employment relationships, in the inspection phase at the supplier's In order to provide the sector with a pool 37,641 employees of contracted companies, permanent contracts accounted for 48%, while premises. It evaluates elements such as of qualified local resources which suppliers mainly Italian nationals (51.6%) or coming from fixed-term contracts exceeded 33%. Staff the technical/professional suitability of the can draw on, regardless of who acquires the EU countries (22.4%). Non-EU citizens totalled leasing contracts equal 10%. company under examination, the regularity individual contract, the Company has shown of contributions and remuneration of its transparency by also signing a series of employees, the existence of a structure agreements with leading work agencies. NUMBER OF CONTRACTING COMPANY WORKERS dedicated to occupational safety, etc. The prospect of stabilizing the supplier A preliminary analysis is carried out before base, as far as possible, pursuing long-term PERMANENT any supplies or services are received from the partnerships characterized by transparency 48.4% suppliers. There are also a series of specific and collaboration, and continuity in terms checks, carried out by the competent site of worker presence in the areas involved at 18,186 structures, to verify compliance with the individual production sites, also meets the FIXED TERM above obligations by suppliers from the time expectations formulated by some institutional they enter the factory until the activity is stakeholders, who see in these elements 12,651 33.6% completed. the prerequisite for a better scaling of infrastructures and social services, as well as 37,641 TYPE OF Management of contracting companies for identifying appropriate integration policies. CONTRACT The participation of the resources involved Some key indicators have been identified in 3,792 AGENCY STAFF in company business processes and the order to monitor these phenomena: supplier sharing of common principles, behaviours turnover, employee turnover, employment 10% and objectives are fundamental for contract type and geographical origin of the achieving continuous improvement in the contracting companies' personnel. OTHER TYPES production Fincantieri model. In this regard, The findings that emerged during the year 3,012 the consolidation of the relationship with provide a revealing picture: from January to 8% suppliers and, as a result, a joint commitment December 2017, 2,090 companies entered to continuity is of primary importance. the Company's Italian shipyards, of which 830 This possibility helps both sides to better were not present at the beginning of the year. understand and share the processes of change, to refine the relational dynamics and The most prevalent ethnic groups and Bengalis (14.6%). consequently align their behaviours. This also (excluding Italians) were Romanians (16.9%) applies to workers engaged in contracted activities, for whom a reduction in turnover is desirable. This objective was shared at the ORIGIN OF CONTRACTING COMPANY WORKERS trade union level and implemented in the most ITALY 51.6% 5.5% OTHER EU COUNTRIES 22.4% 20.5% EUROPE NON-EU COUNTRIES REST OF THE WORLD
The data refer to FINCANTIERI S.p.A.. The data refer to FINCANTIERI S.p.A..
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CHARACTERISTICS AND MANAGEMENT the programme, seeking the best compromise OF THE SUPPLY CHAIN OF FOREIGN in terms of price and quality, in order to COMPANIES support the business and satisfy the customer. Specificaudits are carried out on suppliers, Fincantieri Marine Group: supply chain which are also subjected to reassessments. In Fincantieri Marine Group (FMG) is one of particular, when a supplier does not maintain the leading manufacturers of medium-sized the capabilities and qualities that led to its ships in the United States and operates for enrolment in the register and becomes critical civilian customers and government agencies. to the FMM business, it is expelled from the The US Government is the main customer list of usable suppliers. The purchase process of Fincantieri Marine Marinette (FMM) and is defined through various procedures that requires high quality, high performance describe all the steps that must be followed to goods and services provided by suppliers issue a purchase order according to the needs with proven experience. In order to fulfil the of FMM. Suppliers are selected according to objectives of Congress, the Company supports various criteria, starting from their experience small and medium enterprises in selecting its in the marine sector. Other additional factors suppliers, in particular those run by women, that are considered include: estimated cost, economically and socially disadvantaged purchase frequency, size, position, shipowner's individuals, veterans, and companies that are recommendations, customers, other suppliers, part of the Historically Underutilized Business recorded non-conformities and visits to Zone Program (HUB zones). Founded in production sites, if required before starting 1997, the HUBZone Program aims to promote the work. An orientation course is provided economic development and employment to suppliers performing services in shipyards growth in disadvantaged areas, helping small before the works begin, to verify that they The data refer to Fincantieri Marine Group. businesses located in these areas through meet certain insurance requirements. They privileged access to opportunities in the public also carry out shipyard safety training courses VARD Group: supply chain Turnkey contracts are the most commonly procurement sector. In 2017, 1,094 suppliers and are familiarized with the correct contact Approximately 78% of VARD Group suppliers used type of purchase orders, followed by received a purchase order from FMM, almost representatives within the Company, in order are located in Norway and another 16% in the materials and equipment. Together they 100% of which are located in the United States, to ensure an appropriate communication flow. rest of Europe. The selection criteria used are represent 79% of the total orders issued by the with almost 52% in Wisconsin and over 51% The procedure followed for requests for offers/ based on the maker list, but also on supply group. Purchasing management is entrusted small businesses. With the exception of indirect quotations begins with the development of a history and previous purchasing experiences. to the Alesund headquarters, while purchase purchases, almost all purchases are managed list of suppliers that are able to guarantee the The most used suppliers are attributable to plans are managed by the procurement teams directly with the manufacturer, unless it is supply and meet all the working, environmental companies in the VARD Group, representing of the various sites. The numbers relating to necessary to go through an agent or there is and government requirements as per FMG 53% of the total value of 2017 purchase orders. suppliers and other data on purchase orders a cost advantage in resorting to a wholesaler terms and conditions. For complex systems are described in the following tables. or distributor. All suppliers working in the or larger services, the supplier subscribes government programme are required to sign a and accepts the supply purpose and certain specific Non-Disclosure Agreement (NDA) and technical specifications. are selected according to a specific procedure which defines the process and the methods to guarantee the selection of suppliers based on criteria of quality, technical capability, delivery times and continuous improvement. The goal is to select a supplier able to sustain
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The data refer to the VARD group.
Goods and services are purchased from The acquisition of goods and services is based suppliers who can guarantee specific quality on technical and commercial information. levels. Suppliers must be selected from Requests for proposals are sent to the those that have been registered as approved possible suppliers, and after the technical and suppliers (maker list) through a direct commercial approval, a winning supplier is evaluation or an evaluation by other companies selected. A contract/agreement is signed and within the group. For activities relating to the a purchase order is issued. Purchase orders cruise sector, a new market segment for VARD, are issued on two complementary systems, the central purchasing management team also through which the entire procurement process uses qualified suppliers approved by the Parent is managed: production specifications, order Company. Providers who work for approval processes, delivery times and VARD Group first receive safety and training payment conditions. courses, available in 5 different languages.
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C OMMUNITY
OUR INITIATIVES
THE FINCANTIERI FOUNDATION
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The activities and the commitment Social area of the Fincantieri Group generate The Group seeks to support and involve local social value and contribute to the communities and the local area through many development of communities social initiatives aimed at:
Developing relationships with communities • fostering employment and integration; where Fincantieri Group is present has • enhancing diversity and supporting the always been one of its priorities. In its areas vulnerable; of operation, the Group is an important • promoting education programmes; local reference point, and over time it has • protecting health and promoting research. built a solid relationship of collaboration with the shared goal of creating value and Fincantieri offers donations to support various opportunities for growth and development. organizations, including: The activities involving local communities are spread over various areas, from social and • FIABA Onlus (Rome) - non-profit recreational to cultural and sporting. organization that promotes the elimination As evidence of the priority given to the of all physical, cultural, psychological and promote and raise the moral value of the • 100 business card holders. relationship with local communities, sensory barriers, for the dissemination of a collaborative contribution of the Masters of The gadgets were included in the 2017 the Parent Company includes in its culture of equal opportunities in favour of Labour in society and in work environments. Christmas gift catalogue, and the foundations organizational structure the Central and an environment with total accessibility and • Giuseppe Verdi Opera House Foundation for continuing this collaboration for 2018 have Local Administration Relations function, usability. (Trieste) - one of the 14 opera/symphonic already been reconfirmed. which interacts with Public Administrations, • Amateur Sports Association CALICANTO foundations to which the Italian State associations and committees in order to Onlus (Trieste) – engaged in integrated has entrusted the tasks of conservation, Food Bank Agreement channel the requests from and to the local projects for young people with disabilities. enhancement and promotion of opera On 15 December 2017, at the Sestri Ponente areas. Fincantieri is deeply aware that each • Goffredo de Banfield Non-Profit Onlus and symphonic music. It also serves as an shipyard, an agreement was signed between shipyard has its own social characteristics, Association (Trieste) – whose primary economic driver, giving employment to over Fincantieri, the Non-Profit Food Bank of Liguria closely linked to the territory in which it objective is to enable elderly people who are 250 workers. Onlus and the I.F.M. S.p.A. food goods supplier. operates. not self-sufficient to stay as long as possible in Starting from 2018, the food surpluses of the their homes, with the best possible quality of Art and ingenuity through reuse plant's canteen will be recovered through OUR INITIATIVES life. Ricrearti is a training and job placement of the Food Bank network solely for social • Workers Moral Religious Assistance project that involves unemployed or solidarity purposes. Fincantieri has identified various areas of Foundation (Genoa) – engaged in works disadvantaged people, through which Furthermore, through its companies, the intervention and tries to contribute actively of religious and social support for workers. Fincantieri has created gadgets by reusing VARD Group promotes many initiatives to each initiative. In 2017, approximately € 2.8 Since 1943, occupational chaplains have had a promotional materials that are no longer usable related above all to social and educational/ million was invested in donations, membership guaranteed presence in factory environments. and are otherwise destined for disposal. cultural issues. In Norway, VARD actively fees, gifts and non-repayable investments. • Italian Association for Cancer Research Fincantieri, together with Ricrearti, wanted supports young people who want to have (AIRC) - support for research on paediatric to combine art and ingenuity in social new experiences, for example encouraging tumours in place of a part of the corporate and environmental terms, in line with the students to participate in the Erasmus project, Christmas gifts. Every year the association Company's own sustainability policy. the European Union's mobility programme FOR THE guarantees funding to over 110 Italian research This initiative produced: for education, training and sports (as part COMMUNITY institutes involving about 5,000 Italian and of this programme, a Norwegian apprentice € 2.8 mln foreign researchers. • 400 keychains; worked for a period in the Fincantieri shipyard • Masters of Labour Federation of Italy • 30 PVC shopping bags; in Monfalcone). VARD has been collaborating (Provincial Consulate of Trieste) - one of • 200 folders for documents; with a number of volunteer organizations for the main purposes of the Association is to • 200 pouches for documents; many years.
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A pilot project was promoted in 2017, Recreation area the external companies aged between 4 and 11, sponsored by national television, which saw Some notable recreational initiatives include: allowing them to board and see the ship built by some volunteer Company employees involved their family members. A theatre show was also in raising funds to construct a building. Ship delivery event offered by the shipowner and created expressly In Romania, where VARD has the two Ship delivery events represent a particularly for them. The Company was very committed shipyards, VARD Braila and VARD Tulcea, the important occasion. They are an opportunity for to this initiative, which involved a total of about Company supports foundations, associations the Company to celebrate with all its employees 1,800 children and 900 parents for the visit to the and schools committed to supporting the the achievement of an important goal. two ships. Moreover, the MSC Seaside ship was elderly, people with disabilities and young These events are organized both for deliveries also opened up to a group of 16 disabled people people. The initiatives include: to cruise ship owners and for the launch of naval with a companion from UNITALSI of the Gorizia vessels. In 2017, Fincantieri organized events chapter and about eighty former workers from • support through the donation of funds to the for every cruise ship delivered during the year, the local section of the Associazione Nazionale Tulcea hospital; which were attended by all those who worked Lavoratori Anziani (ANLA) [National Association • contribution to the Dunarea de Jos University on the construction of the vessels. These are of Elderly Workers]. to purchase specialized software for the naval opportunities to celebrate the completion of a hydrodynamics laboratory and establish some job that lasted many months, and in addition Visits to the shipyards student scholarships; to the employees, these events are also shared During the year, the Monfalcone shipyard • creation of a corporate library to encourage with the suppliers and the community. All the in Italy and the Norwegian shipyards VARD reading; ceremonies include a Workers’ Visit, during Brevik, Langsten and Bratvaag hosted high • donation of surplus food after sea trials to the which the ship is opened up to the workers and school and university master's students, who Red Cross, to be distributed to the elderly in external companies for a visit to the public areas. were shown the naval production process, with need. 2017 also saw the introduction of a new event appropriate explanation. dedicated to children. This first edition of Bimbi In February 2017, the "Small feet, curious eyes VARD Vung Tau in Vietnam offered financial a Bordo [Children on Board] was organized and oversize helmets" initiative involved the aid to 141 families in 10 provinces of central onboard two cruise ships, Majestic Princess and children of the Søvik kindergarten who visited Vietnam hit hard by storm Damrey in MSC Seaside. The event was dedicated to all the VARD Søviknes shipyard. From there, they November 2017. the children of employees from Fincantieri and boarded an offshore support vessel for very unusual day out. Social engagement is a cornerstone for the American subsidiaries, which are active in Company clubs various charitable initiatives and support for All the social units of Fincantieri present in Italy local non-profit organizations dedicated to feature a Company Club where employees children and young people. Employees are and retired former employees can engage in involved in a series of events (around 10 a year) recreational, sporting and cultural activities. that involve fundraising and donations. The premises of the company clubs, the staff in charge of the administrative management The subsidiary Fincantieri Marinette Marine and the economic resources necessary for their established collaboration initiatives with local maintenance are predominantly provided by schools to raise students awareness of the Fincantieri, as a result of agreements with the importance of the manufacturing industry. trade union representatives. In 2017, more than 16,000 registered members benefited from the activities of the 8 company clubs at national level, of which approximately 9,000 were current and former Fincantieri employees.
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The foreign subsidiaries also offer recreational Navies, members of industry and international THE FINCANTIERI FOUNDATION activities. The VARD Group encourages its organizations. employees to travel and explore the Norwegian • Science Festival Event (Genoa) - promotion, Founded in March 2008, the Fincantieri territory also through hiking competitions. enhancement and dissemination of scientific Foundation aims to promote the recovery and In the United States, Fincantieri Marine and technological culture, with a particular focus protection of the Company's historical heritage, Marinette's employees and their families are on scientific and technological resources of the consisting of historical documents relating • 25 Years of the Destriero, photographic involved each year in the annual Christmas tree Liguria region. to naval, military and civil constructions and exhibition, Cantiere della Memoria alle Grazie, La lighting ceremony. • Trieste Next - Festival of Scientific Research products of industrial archaeology. Spezia. - an event that promotes dialogue and debate The Foundation intends to sustain the business • Metamorphosis exhibition. From liners to cruise Scientific area among the most representative personalities in culture in a continuous, organic and authoritative ships - Monfalcone Contemporary Art Gallery Fincantieri participates and sponsors activities the field of scientific and applied research, as well way, giving space to the way of thinking that and Fincantieri Wartsila Recreational Club, to disseminate research and innovation through as innovative companies. joins together concrete industrial experience with Trieste. the development of scientific and educational historical memory. The intention is to act as a • 100 years of Porto Marghera industrial projects and open dialogue with experts in the Sports area supporting element among national institutions exhibition, Vega Centre of Marghera. field: Barcolana dedicated to safeguarding business culture. The • Barcolana 2017, Research and Innovation Space, For many years now, Fincantieri has supported Foundation is a non-profit organization that Salone degli Incanti in Trieste. • European Turbomachinery Conference the Barcolana, a historic international sailing also pursues social solidarity goals, promoting • 90 Years of the Panzano district, Monfalcone (Stockholm/Sweden) - one of the most regatta that has been held for 50 years in the cultural initiatives and activities aimed at Contemporary Art Gallery. important conferences in the world in the field Gulf of Trieste, on every second Sunday of achieving welfare, education and support for • Another World. Meeting with the film of fluid dynamics for turbomachinery with October. With a busy schedule of around 350 citizens, dedicating part of its resources to the director Thomas Torelli, Gallery of Modern and application also in the naval field. Fincantieri events, capable of attracting over 200,000 promotion of studies, research and conferences Contemporary Art, Rome. presented the results obtained from the research people and focusing a lot of attention on Trieste in the cultural and scientific field. These aims • Atlantic Lightning. The feat of the Destriero, Lerici. and development of the supersonic flows of and Friuli Venezia Giulia, the Barcolana is a represent a significant and consistent vehicle of • Republication of the book Michelangelo and steam turbines that it produces. natural driver for brand promotion. the Company's social function in its local area Raffaello by M. Eliseo and S. Baldini, with a • Future Surface Fleet (Portsmouth/England) Specifically, the Fincantieri Cup sees world-class and in the debate on civil and economic society preface by the Fincantieri Foundation. - conference on new technologies applied to crews racing on board high-tech ships. of our day. Through its activities, the Foundation • Contribution to the making of the celebratory military ships. Foreign subsidiaries are very active in supporting has enabled the recovery of tens of thousands video for the 25th Anniversary of the feat of the • The radar and electro-optical signature of sports initiatives. The Brazilian shipyard of VARD of publications, technical drawings and images Destriero. modern naval vessels: significance, methods Promar sponsored a Paralympic swimmer related to the industrial production of ships, for control, and technological developments through the Bolsa Atleta state programme. documents that have been produced in Italian (University of Pisa - Department of Information shipyards since the late nineteenth century. Engineering) - analysis of specific topics related By participating in conventions, exhibitions and to radar and infrared signatures. conferences the Foundation has contributed • International School of Advanced Studies to disseminating and promoting the historical (Trieste) - as part of the Summer School initiative, heritage of Fincantieri, ideally positioning itself Fincantieri held a series of lectures at this between the world of culture and the world of advanced training school. business. During 2017, the Fincantieri Foundation • International symposium on the developments continued to promote social initiatives and give in the design, construction and management further impetus to its institutional activities, of high-speed vessels (University of Naples marking its presence in activities promoting the Federico II - Department of Industrial cultural heritage, with editorial works, thematic Engineering, Naval Section). exhibitions, theatrical performances as well as • Regional Seapower Symposium (Venice) participating in conventions and conferences. – symposium that sees the presence of the The initiatives supported by the Foundation are highest representatives of the world’s biggest as follows:
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E NVIRONMENT AND CLIMATE CHANGE
ENVIRONMENTAL MANAGEMENT SYSTEM
ENVIRONMENTAL ASPECTS
ENVIRONMENTAL INVESTMENTS
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Navigation is about the sea and a model of excellence also in terms of Fincantieri has a natural bond with maximum environmental protection. To manage the more significant environmental this element: a profound awareness Preventive approach aspects and prevent its business having Assessing the current and potential environmental that binds us to follow the rules of impact of its activities on the environment and manage an environmental impact, Fincantieri is environmental aspects according to the principles of environmental friendly, safe and precaution and prevention, promoting the use of the best sustainable growth committed to implementing and maintaining Communication available technologies and raw materials with reduced Making available to all internal and external environmental impact an Environmental Management System parties concerned the environmental policy Environmental impact reduction document, which expresses the will of Reducing the impact and magnitude of its own Environmental threats dominate the and obtaining the relevant certification in Management regarding the environment and emissions into the air, water and soil panorama of global risks: extreme weather, accordance with international standard ISO is binding for all company employees and all external companies working at our shipyards Minimizing waste production and ensuring natural disasters and the failure to implement 14001 at its sites. In 2017 the Italian sites correct management, recovery and reuse of waste before final disposal adequate measures to mitigate and adapt to that had already obtained certification (Muggiano, Riva Trigoso, Ancona, Naval climate change are considered the most likely Promoting the protection of ecosystem diversity threats for the next ten years. Fincantieri is Ships Department, Arsenale Triestino San Limiting climate altering emissions aware of its environmental responsibilities Marco, Marghera, Castellammare di Stabia, and is committed to safeguarding natural Sestri Ponente) and which continue to be resources and integrating the principles of monitored by the certification body, RINA, PREVENTIVE environmental sustainability in its strategic were joined by Monfalcone and the Merchant APPROACH Continuous improvement choices and business processes in the Ships Department. The Palermo plant also ENVIRONMENTAL Promoting environmental short, medium and long term. As proof of implemented its own management system IMPACT REDUCTION protection this commitment, in 2016 Fincantieri joined in accordance with the requirements of COMMUNICATION the CDP Climate Change Programme, a ISO 14001, with the aim of starting work on prestigious British organisation subscribed certification in 2018 with the conduct of a to by 827 investors throughout the world, Stage 1 audit by RINA. With regard to foreign Environmental subsidiaries, in 2017 the US site of Marinette sustainability Reducing the with $100 trillion under its management, PROMOTING CONTINUOUS environmental impact of which aims to use transparent disclosure obtained ISO 14001 certification and within its business activities by KNOWLEDGE AND principles IMPROVEMENT defining improvement as a lever for improving environmental risk the VARD Group, the shipyards VARD Braila, AWARENESS AMONG programmes which define short, medium management. The Group is also bound VARD Tulcea in Romania and VARD Vung Tau HUMAN RESOURCES and long-term objectives and goals by laws and regulations to protect the in Vietnam were certified. environment and people’s health by imposing MAINTAINING limits on atmospheric emissions, discharges Promoting knowledge RESPONSIBLE REGULATORY and awareness among MANAGEMENT OF THE COMPLIANCE into water and soil and setting rules for human resources Involving human resources at every PRODUCTION CHAIN the treatment of hazardous waste and the level in the implementation of its reclamation of any polluted sites. environmental policy with every appropriate measure and initiative, Maintaining regulatory compliance including information and training Continuous monitoring of the development specifically designed to promote of environmental regulations, so that new ENVIRONMENTAL MANAGEMENT SYSTEM environmentally friendly behaviour, and existing site processes/plant are always respect for laws and regulations and in compliance with the relevant standards. the most stringent internal rules/ Responsible management Constant monitoring of working activities to Environmental policy procedures adopted of the production chain ensure effective compliance with standards and prevent non compliant behaviour Fincantieri is aware that its level of Promoting environmental protection and develop- ment along the entire production chain, involving responsibility is judged by its ability to suppliers and contractors as important players in its own sustainability policy. For further detail see combine, in its work, professionalism and Ensuring that the environmental policy the section dedicated to the supply chain and the relevant management system are quality with strict respect for laws and implemented at every level of the Company consideration for the needs and expectations organization of the community in relation to the protection of public goods. Fincantieri wants to represent
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ENVIRONMENTAL ASPECTS The Parent Company, in line with the gradual launched and automatic switching off systems Water process of raising production efficiency, were installed for the ventilation, suction and Responsible water management is also Energy following various improvement initiatives air conditioning plant. an important issue for the Group, which Energy efficiency and saving are priorities for already put in place in recent years and Purchase and production of energy from monitors its consumption of water during the Fincantieri, which is committed to progressively also in accordance with European and renewal sources is not currently significant at production cycle and provides for initiatives improving its energy performance to obtain national energy legislation, has created any site. to promote virtuous and eco-sustainable greater efficiency and guarantee the sustainability an organisational unit and process for behaviour also in the offices, with everyday of its activities. Most of the Group’s energy use annual site energy diagnosis and the actions. is in shipyards where, in addition to the direct identification of improvement plans aimed 3 consumption of the production machinery and at the continuous improvement of company WATER CONSUMPTION (THOUSANDS OF M ) equipment, significant consumption is linked energy performance. In 2015 the unit to the services required for safe production in enabled legal obligations connected with TOTAL 3,093 m3 3,124 m3 optimal conditions, such as ventilation equipment, the implementation of European Directive WATER WITHDRAWALS FROM 3 3 lighting and compressed air system. The other 2012/27/EU to be met and 2016 saw the URBAN WATER TREATMENT PLANT 347 m 395 m type of consumption worthy of note is the fuel start of a gradual process aimed at better WITHDRAWALS FROM - THE SEA used on board for operating tests when the ship definition of individual site performance - WITHDRAWALS FROM 3 3 is being delivered. and programming of improvement actions WELLS 1,230 m 1,312 m
linked to capital expenditure and managerial WITHDRAWALS FROM 3 3 ENERGY CONSUMPTION (GJ) INDUSTRIAL WATER SUPPLY 21 m 32 m measures to reduce consumption. WITHDRAWALS FROM 3 3 In particular action was taken to raise AQUEDUCT 1,366 m 1,516 m FUEL awareness concerning the correct use of The data relate to the Fincantieri Group. energy resources in offices and, subsequently, 2016 2017 with pilot initiatives, in some shipyards. 1,344,259GJ These were focused on coordinating production units to reduce or contain energy consumption. During 2016 and 2017, in parallel 1,339,360GJ with analysis activities, the firstenergy efficiency measures were piloted, with a particular focus on the replacement of lighting systems with LED technology (Riva Trigoso 1,584,543GJ and Marghera). Further measures to improve energy efficiency involved the compressed air generation plant (rebuilding and automation 1,453,564GJ of the compressed air plant at Monfalcone). ELECTRICITY In line with the Parent Company’s approach, the foreign subsidiaries also started initiatives targeted at both a reduction in energy The data relate to the Fincantieri Group. 2016 2017 consumption and the implementation of more efficient technologies. Specifically at The figures have increased over the previous the US production sites a full-scale campaign year due to increased production volumes. to replace lighting with LED technology was
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Waste Raw materials The VARD Group has put into operation The Parent Company has prepared a specific WASTE BY DISPOSAL METHOD The main raw materials consumed by the similar systems at the Norwegian Brattvaag, company procedure for the collection of Group consist of: Langsten and Aukra shipyards. The machining residues and waste disposal, 185,874t Norwegian Group is always sensitive to which sets out the criteria to be adopted • steel for the hull; these areas and is continuing to carry out for the removal of materials and product • copper for the electric wiring and automation; research into new methods to improve residues during shipbuilding and guidelines on • steel, iron, plastics and other iron and non- its own practices and to minimize the responsibilities and procedures. In Italian sites RECOVERY iron alloys for the piping installed onboard; emissions resulting from industrial 89% 11% the percentage of waste recovery is about DISPOSAL • welding material, paints and primers. activities. The Group’s commitment is also 80%. For the VARD Group the recycling of demonstrated by its participation, since waste is a priority; in 2011 a regulation was Greenhouse gas emissions 2008, in the Confederation of Norwegian introduced on the management of waste and 23,581t The Fincantieri Group constantly monitors Enterprises’ NOx-Fund, whose primary the Group continues to record an increase in its emissions of greenhouse gases (GHG) objective is to reduce emissions of the amount of waste recycled, which has risen with the aim of achieving continuous greenhouse gases. TOTAL:209,455t from 65% in 2012 to over 90% in 2017. improvement in terms of impact. At the In the United States the Marine Fincantieri level of initiatives to reduce emissions of
Group has specific waste management policies carbon dioxide (CO2), the most important and procedures and aims to continuously 188,484t ones, starting from 2015, are the measures improve its waste management processes. By taken to reduce losses from networks
monitoring waste produced, the organisation is for the distribution of CO2 (used in able to ensure that all the material for recovery welding) and the implementation of plans is collected and managed correctly, seeking NON HAZARDOUS to construct points 90% electricity supply innovative solutions for reusing scrap materials, 10% HAZARDOUS to service ships under construction or like wood, for which the recycling percentage maintenance, to limit the need to produce is about 40%. Fincantieri Marinette Marine is energy using the on-board systems. In also reviewing the waste management process 20,971t relation to the last point, there has been in order to reduce the quantity sent to the a progressive start-up, since 2015, of new dump, aiming to increase the quantity of waste TOTAL:209,455t 50/60 Hz frequency conversion systems to treated using energy recovery processes. supply ships in the Ancona, Muggiano (SP) The data relate to the Fincantieri Group. and Sestri Ponente (GE) shipyards.
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GHG EMISSIONS (tCO2e) the dock, the production activities carried out Danube Delta, an area protected by UNESCO. on the quay and the sea tests may affect the The ISO 14001 certification, obtained in 2012, protected area. certifies the presence of the precautions required to safeguard the site. VARD Promar, 90,088tCO e 2 in Brazil, occupies a surface area of about DIRECT EMISSIONS 800,000 m2 and part of it (250,000 m2) is (SCOPE 1) adjacent to the mangrove forest, considered FINNER 89,973tCO2e CUVIER'S BEAKED by WWF to be a biome, that is, one of the WHALE fourteen major types of habitat into which the Earth is divided. Also in this case, specific TOTAL GHG BOTTLE-NOSE and special precautions are put in place in EMISSIONS tCO2e 233,598tCO2e SPERM WHALE accordance with local legislation. PILOT WHALE
INDIRECT EMISSIONS COWFISH (SCOPE 2)
143,510tCO e 250,167tCO e 2 2 160,195tCO2e
COMMON DOLPHIN
COMMON SEAL
2016 2017 Scope 1: Direct emissions, from sources owned by or under the control of the Group. Scope 2: Indirect emissions from electricity consumption. The data refer to the entire Fincantieri Group. The emissions have been estimated following the guidelines of the Greenhouse Gas (GHG) Protocol and using the emission factors of the World. Resources Institute (WRI), the higher institute for environmental research and protection (ISPRA), the Intergovernmental Panel on Climate Change (IPCC) or International Terna Comparisons 2014/USA. The protected area was introduced with the aim of protecting the following marine mammals: Corporate Mobility transport. The use of company vehicles inside The production site at Marghera (surface area As regards Company transport, Company shipyards is limited. 370,000 m2), which is on a natural lagoon, is policy gives priority to the use of public considered part of the UNESCO site - Venice transport whenever this is possible and does Biodiversity and its Lagoon, and therefore activities linked not create excessive difficulties for travel, thus Fincantieri considers safeguarding of the to the flooding of the dock, the production avoiding recourse to car use. natural value of the areas involved in its activities carried out on the quay and the sea As for transport for the supply of materials, shipyard activities very important. To protect tests may affect the protected site. deliveries are managed centrally to reduce the these places, which must be preserved, specific In the United States Fincantieri Marinette number of vehicles needed to meet production and special precautions are put in place in Marine is positioned next to the Menomonee, requirements. accordance with local legislation. in Wisconsin (for a surface area of 21,315 m2). In the United States Fincantieri Marinette The production sites in Muggiano (surface The river in question is an area to be protected, Marine has implemented a car pooling policy area of 147,000 m2), Riva Trigoso (surface especially due to the quality of the waters, the to encourage employees to travel together, area 173,000 m2) and Sestri (surface area marshland and the ecosystem of aquatic flora making travel more efficient. In additioncycle 237,500 m2) are inside an International Marine and fauna. As regards the VARD Group, the parking has been made available to provide Protected Area - Marine Mammal Sanctuary. Tulcea shipyard, in Romania, occupies a surface employees with an alternative means of Therefore activities linked to the flooding of area of about 750,000 m2, adjacent to the
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ENVIRONMENTAL INVESTMENTS In 2017 the Fincantieri Group invested more than € 9 million in environmental protection. In particular, the Parent Company committed more than € 7 million to specific and innovative projects to reduce the environmental impact of its activities.
Over ENVIRONMENTAL € 9 mln PROTECTION
In relation to atmospheric emissions, during 2017 the Monfalcone shipyard completed construction of new facilities for sanding and painting of manufactured items in confined conditions. The design solution produced, with the adoption of extraction and post- combustion purification plant, is one of the best technologies available. This work is part of the wider improvement action undertaken at company level, which in recent years has also involved the Ancona, Marghera and Castellammare di Stabia shipyards, where similar systems have already been implemented. In terms of authorizations, at the end of 2017 the administrative process leading to the issue, for the Monfalcone shipyard, of the Autorizzazione Integrata Ambientale (AIA, Integrated Environmental Authorization) by the Friuli Venezia Giulia region was completed. This is the first of its type in the Company.
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A NNEXS
METHODOLOGICAL NOTE
DESCRIPTION OF MATERIAL AREAS
GRI CONTENT INDEX
INDEPENDENT AUDITOR'S REPORT ON THE CONSOLIDATED NON-FINANCIAL STATEMENT
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METHODOLOGICAL NOTE give a broad comparative picture. common methodology available across the In order to standardize the reporting of the whole Group. The development of a common The Consolidated Non-Financial Statement information and make it easier to relate to methodology will be the subject of a technical of the Fincantieri Group (hereafter also the contents indicated in the normative feasibility assessment in the short to medium Sustainability Report), now on its first edition, reference, for each theme evidence is term. Furthermore, in order to correctly show is a communication tool that describes, in given on its materiality in relation to Group performance and guarantee the reliability of a transparent and structured manner, the activities, the risks connected with it, the the data, the use of estimates was limited to economic, social and environmental results Company’s policies and commitments and the minimum possible and, if present, these achieved, and demonstrates the Group’s the results obtained and monitored using are based on the best methods available and commitment to sustainable development, with ad hoc indicators capable of representing appropriately described. With regard to the the aim of creating value not only for itself, the results in terms of management. With analysis and description of the main indirect but also for its stakeholders. This document reference to the requirements of Article 3, economic impacts associated with outsourcing reports, to the extent necessary to ensure an paragraph 2 of Legislative Decree 254/16, of the production chain (G4 EC8), Fincantieri understanding of the activities of the company, some information not considered relevant for has used an econometric model developed by its progress, its results and its impact, in an understanding of the company, its progress, Censis (a Foundation recognized with Decree relation to the areas considered important results and impact has been excluded. The of the President of the Republic No. 712/1973). and required by Article 3 of Legislative reporting boundary of the data presented Based on this model, a better estimate was Decree 254/16, with reference to the 2017 in the Statement relates to the Companies produced to represent the multiplier effects financial year (from 1 January to 31 December fully consolidated (using the line-by-line that Fincantieri is able to produce within 2017). As required by Article 5 of the Decree method) in the consolidation area used for the national economic system, based on this document is a distinct report with the the consolidated financial statements. The the specific production and business model appropriate wording to identify it as the main subsidiaries are: VARD, a Group based developed and pursued in recent years and Consolidated Non-Financial Statement (NFS) in Norway listed on the Singapore stock the structure of the supply chain, with the required by the regulation. The Sustainability exchange, Fincantieri Marine Group LLC (FMG), relative levels of integration upstream of the Report has been prepared according to the Fincantieri Marine Systems North America Inc. production cycle for naval vessels. Global Reporting Initiative (GRI) Guidelines for (FMSNA), Isotta Fraschini Motori S.p.A., Marine The economic values are expressed in sustainability reporting, G4 version, according Interiors S.p.A., and CETENA S.p.A.. euros (thousands and/or millions of euros). to the “Core” option. For further detail on the Any changes in the reporting boundary Sometimes the data are rounded to one information required by the GRI G4 Guidelines specified above will be indicated in the relevant decimal point or to a round number, and and the indicators reported, please refer to the sections of the document. In particular, therefore their sum may not coincide exactly table shown in the annex to this document. as regards the subdivision of personnel, with the total value. The contents reported have been included the boundary does not include a marginal The specification of the document based on the results of the materiality analysis number of employees (11) belonging to foreign contents involved an appropriately defined (see Materiality Matrix page 45), which allowed companies which carry out activities for the multifunctional Working Group, coordinated the material aspects to be identified, i.e. those development of new business initiatives, for by the Administration, Finance and Control which reflect the significant impacts for the which no detailed information is available as Department. To coordinate all the sustainability organisation from an economic, environmental data is managed in a way that is not integrated aspects a Sustainability Reporting unit was and social viewpoint, and which substantially with the Group information systems. created, reporting to the Group Accounting influence stakeholders’ assessments and Moreover for the GRI indicators: EN1-Raw and Administration function, which, in strict decisions. It was also considered useful to materials and LA14-Percentage of new contact with the Sustainability Committee and provide, as part of this analysis, a comparison suppliers assessed on the basis of work- with the aim of enabling a clear and precise of relevant areas emerging from the materiality related criteria, the boundary is reduced indication of the information considered matrix with the best practices in the sector to to just FINCANTIERI S.p.A. as there is no significant for stakeholders, identified the document contents according to the principles
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of balance, comparability, accuracy, timeliness, clarity and reliability. The reporting process is based on the current information systems used by the following company units in the different Group operating companies: management control, accounting, quality, environment, internal audit, safety, personnel management, etc. which were Governance integrated using specific data collection and analysis tools (reporting sheets). The data were processed and validated by the various function managers. This document was approved by the Board of Economic resp. Directors on 27 March 2018. The document was also the subject of a limited assurance engagement according to the criteria indicated in the revised ISAE 3000 standard involving PricewaterhouseCoopers S.p.A. who, at the end of their work, issued Human the report required under Legislative Decree resources resp. 254/16 and Consob Regulation 20267 of 2018 concerning the compliance of the information supplied in the Consolidated Non-Financial Statement prepared by Fincantieri under Legislative Decree 254/16 and in accordance with the reporting standard adopted. Social The Consolidated Non-Financial Statement is resp. required to be published annually. The NFS is also available on the website (www.fincantieri. com), in the “Sustainability” section. For any further information it is possible to contact the Sustainability Reporting unit at the Product resp. email address [email protected]
Environmental resp.
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DESCRIPTION OF MATERIAL TOPIC Procurement activities itself to improving energy efficiency and saving, change in safety culture, as a first step towards A significant portion of the overall value of each proper management of water resources and further development. The key element is Governance and business integrity ship depends on materials, parts, components correct disposal of waste and effluent. personnel training as a tool for risk prevention. Business integrity is the capacity to develop the and turnkey systems supplied by third parties. Safeguarding the natural value of the areas business fairly and transparently and is a key The Group actively manages its make-or-buy affected by shipyard activities is also important. Training and education factor characterizing the identity of the Group, procurement strategies and therefore the size To protect these delicate places, specific Investment in staff training and development as well as an important element in its reputation. of the contribution of third party suppliers to and special precautions are put in place in is of strategic importance in terms of restoring Responsible governance ensures fair and the overall value of the project, also through accordance with local legislation. a high level of skill and know-how in the field, transparent conditions in the conduct of rigorous qualification processes. at all levels. Accordingly the training on offer business affairs and the related company Environmental impact has been expanded with new technical and activities, protecting the company image Product quality and compliance of products and services managerial training programmes. and reputation, meeting the expectations of with technical standards The Group operates with a “life cycle” stakeholders and safeguarding the work of Excellent levels of quality are in the DNA of the approach, aiming to minimize the Local communities employees. Group, because the complexity of its business environmental and social impact of a product and relations with the local area requires high standards in terms of quality or service over its life cycle, departing therefore Local development is directly linked both Economic and financial sustainability and compliance with technical regulations and from a model which sees the impact on the with business activities and with the ability to The Company is committed to increasingly standards, at each stage of the production environment and society of only production systematically involve local players, showing sustainable and responsible performance, process. Responsibility for ensuring quality is activities, and broadening the analysis of awareness of the impact on the community. creating the conditions for development which widespread and shared. possible negative external effects to all the links In terms of business activities, networks of meets the needs and expectations of all its in the value chain. small and medium-sized enterprises (SME), stakeholders. Customer satisfaction highly specialized in various macro-sectors, Customers and their satisfaction are at the Diversity and equal opportunity are engaged. In addition, initiatives to promote Innovation, research and development centre of the Group’s interest; customer Diversity allows all the transformations and the development of local communities are Technological excellence is a key element satisfaction is pursued by constantly involving changes currently taking place to be embraced stimulated and encouraged, with the aim of of the Group’s entrepreneurial approach, the customer at the execution stage, in the and represents an open, flexible and helpful creating shared value. which allows it to maintain and strengthen continuous monitoring of quality and through relational approach. With regard to equal its competitiveness and leading position in the offer of innovative products. opportunities, significant commitment has been Human rights complex, markets with high potential. given to increasing the presence of women in The Company has a strong commitment to Climate change the Company. ensuring that the skills and competencies of Employment protection The Group is bound by laws and regulations to each employee are developed and maintained, and trade union relations protect the environment and people’s health Company welfare both through recognition of merit and respect People are the key assets of the Group and their which impose limits on emissions. This is an innovative tool which permits efficient for equal opportunities, with the aim of protection generates wealth for the company. The control of emissions is reflected in a management of resources and provides an safeguarding the human rights sanctioned by Individual growth comes with constant commitment to continue carrying out research alternative to traditional pay and incentive the Universal Declaration of the UN. Moreover collaboration and cooperation, factoring in into new methods to improve practices and mechanisms. The ultimate aim is to improve the the Group has always paid the maximum common ideas and practice, skills and actions, minimize the emissions resulting from industrial quality of life and wellbeing of employees and attention to ensuring transparency and international exchange and comparison and a activities. their families. observance of agreements and laws governing multidisciplinary approach. Industrial relations the contracting (tendering) system, a key in Fincantieri are based on a participative Environmental management Health and safety in the workplace element in its own development capacity and model which values and enhances the role of Environmental protection is at the centre of the Safety at work is a condition for the competitiveness in the relevant markets. trade unions and workers, also through the activities of the Company, which must commit performance of work without exposure to establishment of appropriate joint committees. itself, in carrying out its activities, to making the risk of accidents or occupational disease. the principles of environmental sustainability Historically Fincantieri has dedicated significant its own, both in its strategic choices and in its effort to the protection of health and safety; business processes. To this end it must commit over the years it has promoted a profound
168 169 FINCANTIERI GROUP FINCANTIERI GROUP
GRI CONTENT INDEX Key: FC: FINCANTIERI S.p.A. and Italian subsidiaries The following table establishes the link with the VARD: VARD Group “core” information requested by the GRI G4 FMG: Fincantieri Marine Group guidelines. FMSNA: Fincantieri Marine System North America Inc
G4 GENERAL STANDARD DISCLOSURES
170 171 FINCANTIERI GROUP FINCANTIERI GROUP
172 173 FINCANTIERI GROUP FINCANTIERI GROUP
174 175 FINCANTIERI GROUP FINCANTIERI GROUP
176 177 FINCANTIERI GROUP FINCANTIERI GROUP
178 179 FINCANTIERI GROUP FINCANTIERI GROUP
COMPLIANCE
180 181 FINCANTIERI GROUP FINCANTIERI GROUP
INDEPENDENT AUDITOR'S REPORT ON THE CONSOLIDATED NON-FINANCIAL STATEMENT
182 183 FINCANTIERI GROUP FINCANTIERI GROUP
184 185 Parent Company Registered office Via Genova no. 1,34121 Trieste, Italy Tel: +39 040 3193111 Fax: +39 040 3192305 fincantieri.com Share capital Euro 862,980,725.70 Venezia Giulia Company Registry and Tax No. 00397130584 VAT No. 00629440322
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