Benetton Group

Integrated Report 2018 Benetton Group

Integrated Report 2018 Contents

Letter from the Chairman 7

Highlights 2018 9

Benetton Group profile 15 Our values 18 Our history 20 Governance 22 Business Model 29 The Group’s initiatives 32 Risk management 36

Our brands 39 United Colors of Benetton 42 The store in Oxford Street 44 Sisley 46

A design company 49 Product research 52 Dress Safe 53 Digital innovation 54 Priority to ideas 55 Fabrica Circus 58

A people company 61 Human resources 64 Mittelmoda International Lab 74 Human rights 75 The new faces of an Italy that studies and works 80

A green company 83 Sustainable materials 86 Management of environmental impact 88 Detox Commitment 89 Towards a circular economy 94 B-Care 95

A numbers company 97 Financial capital 100 Production capital 102

Appendix 105 Methodological notes 106 GRI content index 112 Independent Auditors’ report 121 Letter from the Chairman 6 | Chi siamo so. doing to continue determination firm our is It world. the color and again big to dream begun has Company the past; is Today time that brands. market mass by other made choices the seconding small, thinking risked Group Benetton time, For some phase. roll-out advanced an in already is which openings of new program to amassive thanks abroad, and Italy in implement we will that vision well-defined and Aclear technology. digital integrates also that experience purchase a consumers offering of color, knitwear, and synonymous light to being return must stores our hand, other the On procurement. faster and efficiency greater attain also way, we will this In area. Mediterranean the in production our improve, enhancing to further we intend which quality, with price best the at i.e. products, Benetton to offergenuinely we intend hand, one On twofold. is challenge Our techniques. and materials styles, new with to experiment determination the and drive recovered we have the them, with And, knitwear. and color world: over the all recognizable immediately garments our make and DNA of our part are that elements director, style recovered we to have the creative anew Thanks pioneers. undisputed been we have where amarket in again, to We competitive be aim repossessing. we are that values unique and innovations of ideas, made history, extraordinary of our legacy rooted is the in future our But future. profitable and asolid to ensure order in value to creating back Company the to bring aims Group of Benetton relaunch The more. and more them engage and to involve intention firm our is it job, and excellent an doing are who world, of the rest the Europe and Italy, in workers 7 500 from the starting Company, the in believe for who those respect with ahead we looked hearts, heavy with Although brands. success of our and foundation to the contributed who people, cherished most of our away,two passed Carlo and Gilberto However, losses. major and 2018 pain of great ayear also was momentum. new gathered has Group Benetton and we implemented project development of the results 2018 encouraging first the saw Dear

Stakeholders, Luciano Benetton Group Benetton Chairman

7 | Letter from the Chiarman 8 | Chi siamo 2018 Highlights mln 1230 of € of net sales

85 markets | Highlights 2018 | Highlights 2018 10 4 718 11 stores

25 101mln online markets garments produced* * Data includes local production of Benetton India Pvt. Ltd. and Benetton Korea Inc. 70% of employees 74% 26% involved in training Employees initiatives 7 510

Banca Ore Etica Green Campus: 2 800 hours -5% electric energy consumption, -10% natural 27.7% | Highlights 2018 | Highlights 2018 12 gas consumption sustainable 13 cotton 87% of segregated and recycled waste Product safety tests >43 000 CSR audits 2016-18: 935 14 | Chi siamo transformations to of the and people todignity the is attentive that approach of an also but of fashion, history the in mark its left has that is of style not only akaleidoscopic merit the and element distinctive its been always definitely Color has companies. best-known apparel 1965, in grown to establishment become world’s Group of one has the its Since Benetton Benetton Group control. channels processes of facilitating increasing aim speed and the with business model, developed and its investments targeted made fact, in has, by and not stood Group has Benetton posed by globalization, challenges the Faced with Sisley. and of United Colors Benetton brands, two and Group’sthe markets over present 4700 with main stores globally the in identity, define that values the are commitment social and internationality affordable quality, Style,

of

society.

profile

Our history Our values • Color • Quality • Freedom of expression • Social commitment • Internationality • Culture

Governance • Board of Directors Risks • Investment Committee • Control and Risk Committee management • Human Resources and Remuneration Committee Benetton Group profile Group | Benetton Benetton Group profile Group | Benetton

16 • Strategic risks • Organizational Model pursuant 17 • Executive risks to Italian Legislative Decree 231/2001 • Financial risks • GDPR • Legal/compliance risks • Sustainability Committee • External risks • Benetton Group companies in the world

The Group’s Business initiatives Model • The Group’s projects • Value generated by Benetton Group

Our values Social commitment Producing apparel is not enough. As key player in a continuously evolving scenario, Benetton Group considers it necessary to act concretely in order to remedy social injustice, by ensuring respect for human rights and promoting the development of individuals and the community. Color The first thing that comes to mind when thinking of Internationality the Benetton Group is color, in all of its expressions. Benetton Group has always thought globally and not The colorful knits that have revolutionized the world only in relation to business. Our vision is that of a of fashion are a metaphor for a playful and positive world in which ethnic, cultural and religious differences approach to life, celebrating our Italian origins. are overcome in the name of global citizenship.

Quality Culture Benetton Group is constantly committed to striving Since the beginning, Benetton Group has opened for the highest level of quality in all of its products, a dialogue with some of the most prominent processes and services. This approach is part of international figures in the world of culture to bring to the Group’s tradition and is reflected in all of the the Company new tools to understand and interpret Company’s activities, thanks to the passion and the contemporary world. Because knowledge is crucial dedication of all our employees. for the success of any enterprise. Freedom of expression Benetton Group is outspoken. We are convinced that Benetton Group profile Group | Benetton our society can only evolve if people are provided with profile Group | Benetton

18 the right tools and allowed to express their opinions 19 freely. This will result in more ideas, greater dialogue and more tolerance, also vis-à-vis those who see things differently. Our history

1955 Luciano and Giuliana 1962 Benetton starts producing 1965 Benetton Group was 1966 Opening of the Group’s 1969 Opening of the store on 1971 Registration of the 012 Benetton have the knits in neutral colors founded. In the same first store in Belluno. Boulevard St. Germain, brand and development intuition to develop and dyeing them based on year, the factory Paris. It is the first store of the first jacquard and and sell a colorful, the orders received. First designed by architects outside Italy. diamond patterned knits. yellow knit, a brand new development of garment Afra and Tobia Scarpa product in those days. dyed production. was inaugurated in Ponzano, in the province of Treviso.

1974 Sisley enters the Group’s 1978 Group exports reach 60% 1983 The Group enters Formula 1 1985 Benetton ad campaigns 1986 The Group is listed on the 1987 Fondazione Benetton brand portfolio. of production. as sponsor of the Tyrrel by Oliviero Toscani win Milan Stock Exchange, Studi e Ricerche is team. Three years later, the Grand Prix de la followed by the listing established, along with the after the acquisition of Publicité in France. This on the Frankfurt Stock Carlo Scarpa International Toleman, the Benetton is the first of a series of Exchange in 1988 and New Award for the Garden. Formula Limited racing awards that, together with York Stock Exchange in team wins two drivers’ and criticism and censorships, 1989. one constructors’ world fuel debate in many championships. In 2000, the countries around the team is acquired by Renault. world.

1989 Development of the iconic 1991 Development of the Colors 1994 Fabrica, Benetton Group’s 1995 Development of the 2006 Benetton Group celebrates 2007 Development of the green United Colors of magazine distributed in 40 Communications Research Undercolors brand. its 40th anniversary with an Ponzano Children Benetton logo. countries and translated in Centre, is founded. exhibition and a show at the Center for the children four languages. Pompidou Centre in Paris. of Benetton Group Benetton Group profile Group | Benetton employees and for the profile Group | Benetton

20 children of the families of 21 the surrounding area.

2012 Benetton Group delists 2013 Benetton Group is 2014 The Group is reorganized 2015 The partial demerger 2016 In April, Benetton Group 2017 Luciano Benetton appoints from the Milan Stock recognized by Greenpeace into three separate entities: of Benetton Group S.r.l. S.r.l. acquires full control Oliviero Toscani as Creative Exchange, after also for its commitment one directly focused on is accomplished after of Benetton Korea Inc. Director. delisting from those of to environmental the brands, one dedicated completion of the refocus Frankfurt and New York. sustainability. to manufacturing and one and relaunch plan. engaged in real estate management.

2018 Luciano Benetton appoints Jean-Charles de Castelbajac as Artistic Director of the menswear and womenswear collections for the United Colors of Benetton brand. Governance C Chairman Executive SA Standing Auditor (1) General Counsel AA Alternate Auditor Non-Executive (2) Head of Independent Internal Audit OverviewG oof thev Company’ser Governancena nas of ceMay 6, 2019. Composition of corporate bodies at May 6, 2019 C Chairman SA Standing Auditor ExecutiveMember (1) General Counsel AA Alternate Auditor Non-Executive (2) Head of Independent Internal Audit Governance Board of Directors Office Investment Control Human Resources MonitoringMember Body of Benetton S.r.l. Committee and Risk and Remuneration (D.Lgs. 231/2001) Committee Committee Board of Directors Office Investment Control Human Resources Monitoring Body of Benetton S.r.l. C Committee and Risk and Remuneration (D.Lgs. 231/2001) Committee Committee

Benetton S.r.l. (Single shareholder) C

Benetton S.r.l. (Single shareholder)

Independent Board of Statutory C Auditors Auditors Ernst & Young S.p.A. Independent Board of Statutory C Auditors Auditors C C Ernst & Young S.p.A. C C C

Investment Human Resources C Committee and Remuneration Investment Human Committee Resources Committee and Remuneration Board Board of Statutory Auditors of Directors Committee C Board Board of Statutory Auditors of Directors SA C Control SA and Risk SA Committee AA

Benetton Group profile Group | Benetton Control SA profile Group | Benetton

22 and Risk AA 23 Committee AA

AA

BoD breakdown by age

BoD breakdown by age Independent Board of Statutory Auditors Auditors 1 Ernst & Young S.p.A. Benetton Group S.r.l. <50 Independent Board of Statutory Auditors Auditors 1 51-60 Ernst & Young S.p.A. Benetton Group S.r.l. <50 >70 51-60 Monitoring Body 2 4 >70 Monitoring Body 2 4 Functions:

Consultive Due diligence Board Sustainability Functions: Proposals Assistance of Directors Committee Consultive Due diligence Board Sustainability Proposals Assistance of Directors Committee 24 | Benetton Group profile results. financial annual and half-yearly quarterly, and budgets annual • the actions; corporate extraordinary • the of operations; result • the structure; Company’s of the for re-organization the proposal • the resources; of human management the regarding guidelines general • the •  for Group’s the operations; guidelines • the approves: and examines it things, other Among operations. for managing responsible is of Directors Board The ofBoard Directors •  •  tasks: main following the has fi and accounting in experience suitable have members whose Committee, Risk and Control The Control Committee Risk and criticalities. main the analyzing (post-audit), investment on return actual and incurred of costs terms in execution their by monitoring programs investment approved of the implementation the monitors Committee the general, In •  •  to: regard with of Directors Board of the support in capacity and/or recommendation-making advisory diligence, adue in serves Committee Investment The Investment Committee governance; corporate and organization concerning proposals the of the functioning effective and efficacy adequacy, the evaluating in of Directors Board the to assist risks; business principal of the identification the concerning issues specific on opinions expresses it Chairman, Executive of the request the At practices. management sound and good with compatible are subsidiaries its and Company the by faced risks the whether for deciding criteria the determining in and controls internal of the guidelines the defining in of Directors Board the to assist significant and investments regarding procedures Company sustainability; financial and targets profitability their guidelines, Group’s the strategic with consistency their assessing projects, investment specific

transactions.

nance,

• • Group; the and Company of the managers senior and directors Chairman, of the •  •  •  •  •  •  •  • particular: in and of Directors Board of the support in capacity recommendation-making and/or advisory diligence, adue in serves Committee Remuneration Resourcesand Human The Committee Resources RemunerationHuman and Independent of the independence the verify and to assess Auditors; Independent by the provided services non-auditing and auditing all on appointment, the to confirming prior requirement necessary as and advance in opinion an express and to assess of application; method its and model such amending and/or for updating recommendations with Directors of Board the to present whether to evaluate and of Ethics, Code the includes also and Company the 231/2001, Decree Legislative by adopted was which to Italian Model”, pursuant Management and “Organization of the application the on Audit Internal of Head from the report annual to the receive indications with of Directors Board the to provide oversees; it which controls, of internal system letter; opinion the and report Auditors’ Independent the in published results the assess and process auditing of the effectiveness the to monitor data; reporting financial the generates process that the Audit, of Internal Head of the assistance the with to verify, statements; financial consolidated of preparing for purposes the consistency their and adopted standards accounting of the adequacy the Auditors, Independent the and Officer Financial Chief the with together to assess, rules; governance corporate with compliance on information and for the policies subsidiaries; important strategically in bodies control and of management components as identified managers of the profiles skills and criteria composition regarding: proposals evaluates it Group; the and Company for of the employees plans incentive and targets performance examines it remuneration overall the on proposals submits it

Auditors.

Group. the and Company of the managers of senior appointment and recruitment and • Committee Group’s Sustainability of Benetton objectives The initiatives. its through change of social agent an to becoming levels, all at commitment, Company’s of the evidence further is Committee of this establishment The strategy. Group’s sustainability 2015 in of Directors –de by Board up –set Committee Sustainability The Committee Sustainability matter. the in regulations European and national applicable the with compliance in processed always is data that so activities, of their performance the in protection data personal correct stakeholders general, in and, consumers employees, its to ensure S.r.l. Group Benetton enables processing, and assessment monitoring, data for personal responsible function, new The team. by amultidisciplinary assisted Officer, Protection Data as Menardo by Mauro headed function, Privacy anew up set Company GDPR), the as 2016/679 Regulation Protection Data General (known 2018,In European enforcement of the the with GDPR (ILO). Organization Labor International of the conventions fundamental the in contained (ILS) Standards Labor International the adopted has Group the of Ethics, Code its Under Model. of the part integral an as treated is Company by the approved of Ethics Code The parts. special numerous and part of ageneral composed is 2008, in approved 1, March 2016, on Directors one the to replace of Board of the by resolution adopted Model Control and Management Organization, current The Italian Legislative Decree 231/2001 Organizational pursuant Model to resources of human development strategic and activities business into initiatives of sustainability integration continuous and effective the promoting

include: fi Benetton oversees and nes

Tunioli CEO Fabrica Carlo Officer &CSR Audit Internal Taiariol Roberto Officer &Operations Sourcing Product, Piras Andrea Officer &Organization Resource Human Moscatelli Gianni Ugo Officer Operating Chief Brusò Tommaso below: here listed are members Committee The • • • • • Director; CSR of the work the supporting issues. social and environmental on information relevant and of KPIs disclosure the and reporting to integrated related activities overseeing tools; its and strategy sustainability corporate of the application the regarding indications and of information flow aconstant with of Directors Board the providing reputation; brand and to Company related risks of possible light in –also procedures implementation its and for Manufacturers of Conduct Code the with –starting tools implementation sustainability corporate reviewing periodically and examining issues; sustainability on stakeholders external and internal with dialogue promoting activities; sustainability all standardizing

Giorcelli

Officer Staff Chief

25 | Benetton Group profile 26 | Benetton Group profile in the world Benetton Group companies IT IT IT IT IT SE FI oftheworld Rest ofEuropeRest Italy (Finland) Azets FINNISH BRANCH GROUPS.R.L. BENETTON Ponzano Veneto (Italy) SOCIETÀ AGRICOLA ar.l. MINELLI- VILLA 100% Ponzano Veneto (Italy) CHILDRENS.r.l.PONZANO 100% Ponzano Veneto (Italy) FABRICA S.r.l. 100% Ponzano Veneto (Italy) SERVIZIS.r.l.BENETTON 100% Milan (Italy) RETAIL ITALIAS.r.l. NETWORK 100% Malmö (Sweden) SWEDISH FILIAL ITALY GROUPS.R.L. BENETTON SUBSIDIARIES (Treviso Italy) - Ponzano Veneto GroupBenetton S.r.l. MX US CH DK DE FR IE UK NL IE Breda Netherlands) (The DUTCH BRANCH GROUPS.R.L. BENETTON Dublin (Ireland) IRISH BRANCH GROUPS.R.L. BENETTON London (United Kingdom) RETAILBENETTON UK Dublin (Ireland) Ltd. IRELAND AGENCY BENETTON 100% Copenhagen (Denmark) DENMARKA.p.S. BENETTON 100% amMainFrankfurt (Germany) GmbH DEUTSCHLAND RETAILBENETTON 100% Zurich (Switzerland) BEN-MODE A.G. 100% Paris (France) COMMERCIAL S.A.S. FRANCE BENETTON 100% GR TR PT PL IR MC FR BE Tehran (Iran) PARSBENETTON P.J.S.C. 100% (Turkey)Istanbul A.S. VE TICARET GIYIMSANAYIBENETTON 100% Tavros (Greece) OF CLOTHING E.P.E. AGENCY HELLAS BENETTON 100% Warsaw (Poland) RETAIL Sp.zo.o. BENETTON POLAND 100% Porto (Portugal) DE PRODUTOS S.A. TÊXTEIS 2RETAILBENETTON COMÉRCIO 100% Principauté deMonaco AMONACOSUCCURSALE GROUPS.R.L. BENETTON Paris (France) ENFRANCE SUCCURSALE GROUPS.R.L. BENETTON Brussels (Belgium) BELGIUM BRANCH GROUPS.R.L. BENETTON IE PT PT IE ES CN TN IN UK DE PT FR ES FR (Tunisia)Sahline INTERNATIONAL TUNISIES.àr.l. DECOMMERCEBENETTON 100% TN Gurgaon (India) Ltd. INDIAPvt. BENETTON 100% Hong Kong (China) PACIFIC ASIA BENETTON Ltd. 100% amMainFrankfurt (Germany) GERMAN BRANCH GROUPS.R.L. BENETTON Barcelona (Spain) ENESPAÑASUCURSAL RETAILBENETTON CN Porto (Portugal) EMPORTUGAL SUCURSAL GROUPS.R.L. BENETTON MC BE DE DK

NL (Tunisia)Sousse TUNISIE S.àr.l. COMMERCIALEBENETTON 100% CH (China)Shanghai COMPANY Ltd. TRADING SHANGHAI BENETTON 100% MC DE AT IT TN SE SI HU HR GR FI PL CZ TW RU KR TR JP HU CZ AT (Hungary) Budapest -MAGYARORSZÁGIBRANCH FIÓKTELEPE HUNGARIAN GROUPS.R.L. BENETTON Praha (Czech Republic) -ODŠTE BRANCH CZECH GROUPS.R.L. BENETTON Korea) (South Seoul KOREAInc. BENETTON 100% Tokyo (Japan) JAPANBENETTON Co.Ltd. 100% Taipei (Taiwan) TAIWAN TRADING BENETTON Ltd. 100% Vienna (Austria) ÖSTERREICH ZWEIGNIEDERLASSUNG GROUPS.R.L. BENETTON Moscow (Russia) RUSSIAO.O.O. BENETTON 100% RU RU Moscow (Russia) ESTATE REAL O.O.O. KAZAN 100% IR IR ˇ PNÝ ZÁVOD IN MX MX MX US HR IR SI Ljubljana (Slovenia) LJUBLJANA PODRUZNICA GROUPS.R.L. BENETTON Tehran (Iran) OFFICE FOREIGN BRANCH GROUPS.R.L. BENETTON Zagreb (Croatia) ZAGREB PODRUŽNICA GROUPS.R.L. BENETTON (Mexico)Mexico City deC.V. SERVICESIIS.A. BENETTON 100% (Mexico)Mexico City deC.V. SERVICESS.A. BENETTON 100% (Mexico)Mexico City deC.V. S.A. MEXICANA BENETTON 100% (USA) Somerset Inc. USA TRADING BENETTON 100% CN KR TW JP 27 | Benetton Group profile 28 | Chi siamo B usine Customers » Experience Purchases @ »e-commerce (DOS) channel »Direct (IOS+FOS) channel » Indirect Distribution model » Inbound/Outbound Logistics &development »Implementation » Research »Design Store »Sisley of Benetton » United Colors Brand &development »Production »Sourcing » Research »Design Product target. millennials tothe out toreach Benetton of Colors for United campaigns and lines communication developed we and target existing our We consolidated customers. for our experiences purchase comprehensive and engaging increasingly tocreate brands our of reputation the on and distribution omnichannel on We focused channels. distribution online and offline between boundaries the eliminate will which experience, aglobal in consumers end involving years, upcoming the in developed further be will that approach omnichannel an We implemented logistics. reverse and allocation product-to-store prompt re-sorting, automatic transportation, intermodal as such solutions of implementation the through needs sales on personalized almost and impact environmental alower with services logistic toensuring commitment our We continued channels. offline and online the between integration fostering experience brand and knitwear on focused Benetton of Colors for United concept store anew 2018, In implemented we model. store Rich&Raw Sisley’s of implementation the We continued market. the of segment tomove Premium Bridge identity the into contemporary and strong its consolidated Sisley while sustainability, and quality innovation, on focused further Benetton of Colors United brands. our of positioning the strengthening We continued director. artistic anew of involvement the with collections Benetton of Colors United the on impact adecisive making treatments, and materials new of development and research in efforts We consolidated Mode

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29 | Benetton Group profile 30 | Benetton Group profile

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(February 2018)

31 | Benetton Group profile The Group’s initiatives

Benetton and the Sustainable Development Goals In September 2015, the United Nations approved the 2030 Global Agenda for Sustainable Development and Benetton Group has decided to do its part to achieve these goals. In setting out its charter of commitments its 17 Sustainable Development Goals (SDGs). The implementation of this agenda requires nations, industries, for the coming years, the Group chose to associate its actions with the SDGs closest to its core business and businesses, financial institutions, NGOs and civil society to redirect their programs and plans towards these goals. strategic action area.

SDG 5 – Gender equality Gender equality is a necessary step for creating a peaceful, prosperous and more sustainable world for everyone. For this reason, Benetton Group has launched projects and initiatives designed to support the emancipation and legitimization of women around the world.

SDG 8 – Decent work and economic growth Benetton Group aims to reach higher economic productivity standards through diversification and technological progress, relying on development policies that support production activities, creativity and innovation by promoting a healthy and safe working environment for all workers.

SDG 12 – Responsible consumption and production Benetton Group leads the way in the global commitment to the elimination of the use of dangerous chemicals throughout the textile sector by 2020. The Company also implements policies for the sustainable management and the efficient use of resources and energy, as well Benetton Group profile Group | Benetton Benetton Group profile Group | Benetton as for the reduction of waste, also through recycling and reuse, where possible. 32 33

SDG 13 – Climate action The Group’s contribution to combating climate change involves the implementation of initiatives to reduce energy consumption and climate-altering gas emissions, as well as reducing the environmental impact connected with its logistics activities and the distribution of its products.

SDG 17 – Partnership for the goals A successful Sustainable Development Agenda requires partnerships - built upon principles and values, a shared vision, and shared goals - that put people and the planet first. Benetton Group also works towards this goal, developing partnerships that can contribute to the achievement of the sustainable development goals. The Group’s Capitale Naturale Capitale Intelletuale projects Capitale Produttivo Capitale Umano Capitale Sociale A design Capitale FinanziarioA people A green company 1 2 company company Sustainable materials Product Research Benetton for You 37. Sustainable cotton 1. Dress Safe 7. Banca Ore Etica 38. Responsible Down Standard 7 2. Product safety tests 8. Stretch your Time 39. Ban on fur 9. Stretch your Space 3 8 52 Digital Innovation 10. Nice to Meet You Management of environmental 47 3. Benetton.com 11. English for You impacts 49 4. Omnichannel 12. Welcome Back, Mom 40. Participation in Detox Program 48 10 5. Content Factory 4 1. Participation in Sustainable 53 4 9 Training and professional growth 51 5 11 50 6 6. RFID technology Apparel Coalition 46 13. People Management in Colors 42. CO2 emission reduction in logistics 12 14. Self Efficacy in Colors 44 45 43. Saturation of transportation means 15. Ad hoc specialist training 44. Reduction of packaging 16. Office training 43 45. CO emission reduction in the 13 2 1 7. Language training stores and HQ 18. Benetton on Boarding (BOB) 42 14 46. Reduction in energy consumption 19. Green Camp 47. Use of Green Energy 41 15 20. Benetton Engagement 48. Improvement in Data Center 16 and Store Training (BEST) energy efficiency 40 21. UP Strategy 49. Waste management 22. Omnichannel training 39 17 23. Selling in Colors Towards circular economy 37 19 24. We Love Sisley Journey 50. Rationalization of collections 38 18 25. Kick FOS 51. B Long Benetton Group profile Group | Benetton 52. Mineral Dye profile Group | Benetton 34 Reward 35 34 22 53. Denim treatment 36 23 20 26. Incentive plan 24 35 21 29 Zero Injury Target 27. Zero Injury Target Plan 33 32 Human Rights 31 25 30 26 28. CSR Audit Plan 28 27 29. Extension of the CSR Audit Plan to Korea 30. Accord on Fire and Building Safety Social and relational Financial fully implemented 31. Aarohi implemented 32. Nanhi Kali capital (Brand value) capital started 33. Sakhi a regime 34. United by Light Human in corsoNatural 35. Clothes for a Cause capital avviata capital 36. India - POSH: Policy on Prevention of Sexual Harassment at Workplace Production Intellectual capital capital

Capitale finanziario Risk management

Benetton Group focuses the utmost attention on risk control and believes it is fundamental to assess, both risks connected with exchange rates, interest rates, means it is exposed to various tax obligations. The beforehand and on an ongoing basis, the level of risk associated with strategic objectives for the creation of counterparties and liquidity risk. The most keenly felt evolution of related regulations may expose the Group sustainable value. risk is that relative to foreign exchange transactions to the risk of default. as the Group presents significant sales volumes In 2016, a new Risk Assessment process was carried out to identify and manage internal and external risks, as well denominated in Euro and considerable purchase Control model as to identify corrective actions in order to lower the residual risk level to values regarded as acceptable. volumes denominated in US dollars. Delays in the development and roll-out of the new Control Model in the Group’s subsidiaries could result Strategic risks fraudulent conduct; legal risks; inappropriate conduct Legal/compliance risks in the inconsistency and/or unavailability of data to These are risks that could threaten the Company’s with customers and suppliers that could compromise Compliance risk is the risk deriving from the failure to support decision-making processes. current competitive position and the pursuit of its the ability to meet strategic objectives. comply with laws, regulations and internal rules. This strategic objectives. can result in negative effects connected with fines, External risks Business organization penalties, economic losses and, in more serious cases, These risks concern the effects of external events that Brand strategy The staff’s resistance to change could limit or slow damage to the Company reputation with subsequent may impact negatively on the Group’s activities. Risks connected with the United Colors of Benetton down the business transformation process taking place losses, requests for compensation, damage to the brand repositioning strategy. Incorrect timing and in the Company. Other risks include the development Company image, etc. Social and political instability of some nations development could result in losing current consumers of inadequate organizational structures and the inability Delays in the regular delivery of finished goods due prior to acquiring new customers. to attract and retain key, talented people. Company procedures to political instability in some of the countries where The possible inadequacy of Company procedures the Company’s suppliers are located. Distribution channels Product and product quality designed to guarantee respect for the main Italian and Risks deriving from the failure to meet new store The Group’s inability to identify the tastes of international regulations to which the Group is subject. Climate variations opening goals as well as the uncontrolled growth of consumers and offer them products that satisfy Also of particular relevance are problems connected The Group’s business is to some extent sensitive to the online market (e-tailers in particular), which may their needs in terms of quality (considering the with security, antitrust and privacy regulations. the weather. For example, an excessively mild winter create conflicts with the Company’s other strategic characteristics of the fabrics and materials used may lead to lower sales of higher-margin products, objectives, with potential negative effects also on and the fit). Fiscal compliance with a negative effect on the Company’s economic Benetton Group profile Group | Benetton brand positioning. The Group’s presence on the international panorama results and financial position. profile Group | Benetton 36 37 Time-to-market Supply chain An overly long time-to-market may prevent the The ability of the supply chain to respect the delivery Company from quickly following market trends with times of finished products established by the business subsequent loss of sales opportunities. calendar (included in the broader concept-to-shelf program) can impact global margins. Business interruption of the logistic platform Natural disasters may result in business interruption Country strategy and market presence of the logistic platform of Castrette, the hub handling in India and Korea most of the distribution flows. The entry of international brands in the Indian and Korean markets, which are very important to Benetton, Corporate Social Responsibility requires the delicate transition of the content of the The inappropriate management of Corporate Social United Colors of Benetton brand collection towards Responsibility issues could cause serious reputational more global styles compared with the current ones, damage. which have a strong local influence. Financial risks Executive risks This is the risk category most immediately perceived The risks of losses inherent in the Company’s by businesses, also thanks to the implementation of operations, deriving from: human error; the incorrect the International Accounting Standard (IAS) and the functioning of the organization; internal processes and requests for additional disclosures in financial reports the use of systems; unlawful behavior connected with deriving from national civil law. Financial risks include 38 | Chi siamo relations. external coordination and network sales distribution, and production product cycle, entire design of the management the of strategies, definition the includes and integrated is perfectly that quality and passion of style, Together, idea contribute Sisley to an consolidating and of United Colors Benetton appreciated. and recognizable immediately makes it that aesthetics contemporary astrong with isSisley abrand for family. whole the garments offers research, it quality global and creativity of Italian combination of knitwear. color Aperfect and brand is the ofUnited Colors Benetton Group. Benetton of the brands two the are Sisley and ofUnited Colors Benetton Our brands United Colors of Benetton • Collections • Stores • Experience • Undercolors • Focus: The store in Oxford Street | Our brands | Our brands 40 41 Sisley • Collections • Stores • Experience United Colors of Benetton United Colors of Benetton is the lifestyle brand that celebrates freedom of expression, bringing joy Stores and happiness to people. True to its DNA composed of knits and colors, United Colors of Benetton The majority of the United Colors of Benetton stores In 2019 the London concept designs and renews Italian casualwear. follow the On Canvas concept. Welcoming, functional store will also be opened in and dynamic, On Canvas is inspired by the knitting Düsseldorf, Zagreb, Barcelona Today, its target consumers are adult men and women, and boys and girls aged from 0 to 12, yet the colorful loom and features a solid, yet invisible structure upon and New Delhi. United Colors of Benetton knits are a synonym of optimism, diversity and creativity for consumers of every which seasons, collections, colors and materials are In the meantime, the concept age bracket as demonstrated by the level of popularity of the brand all over the world. developed. will be further developed to make it more sustainable, with The kids’ collections make for over 40% of United Colors of Benetton total sales. They are designed by In 2018, the Group presented a new store concept in advanced systems, fabrics a dedicated creative team and presented to the commercial network through specific events. London and replicated it also in Padua and Turin later with innovative features and on. Developed to be a true temple of knitwear, the materials that make end-of-life The objective for the future years is to regain our leadership in Italian-style knitwear and casualwear, retaining London concept store combines Italian-style interior recycling possible. our consumer targets while trying to attract new consumers, namely men and women in the 25-35 age bracket. design, high-tech content, attention to sustainable materials and a focus on the consumer’s shopping Collections trousers, jackets and outerwear. In addition, a broad experience. United Colors of Benetton collections feature range of accessories are offered: handbags, shoes, In September 2018, we also presented a capsule In 2019 we will develop colorful, comfortable, informal, high quality and sunglasses, watches, fragrances and luggage. collection in a retail corner at Selfridges in London, a new store concept – called timeless garments for everyday use, suitable for work, the most famous fashion and luxury department store Light – that will facilitate school and leisure time. In 2018, the structure of the collections was updated in the UK. This step is part of a distribution strategy the development of the indirect by adding a premium level composed of highly that will bring the premium level of the United Colors network. The first Light store United Colors of Benetton key items are knits, polo experimental garments and higher price pieces to of Benetton collections to the world’s most renowned will open in Tirana, Albania. shirts, t-shirts and sweaters, but the collections also the traditional range of basic and fashion items. department stores, starting with Tokyo, Hong Kong, include shirts, jeans, dresses, knit accessories, skirts, Paris and Los Angeles. Undercolors | Our brands | Our brands Experience Undercolors of Benetton is Benetton Group’s brand 42 43 Celebrating diversity, eliminating barriers, fighting translating the colorful, positive and casual personality Structure of 2019 autumn | winter collection against stereotypes, promoting tolerance and of United Colors of Benetton on all product freedom of thought and expression. Those entering categories that are worn in direct contact with the skin. the universe of United Colors of Benetton do it not only for the colors and the quality of the garments, Developed in 1995 to penetrate the Italian market Premium collection but also to share an entire set of recognized values, of underwear, pyjamas, beachwear and coordinated Fashion communicated by a consistent and immediately accessories, Undercolors products are today recognizable brand. characterized by comfort and the quality of the Collection Fashion materials and finish treatments. In 2018, we also launched a series of initiatives and projects designed to establish strong and long lasting Today, 60% of the total sales generated by Benetton relations with hundreds of millions of consumers the Undercolors are made up by the over 300 specialist world over. These were communication campaigns, monobrand stores and 40% by the retail corners in-store initiatives and ongoing dialogue on our inside the main United Colors of Benetton stores in Fashion social media, the preferred channel of today’s and Italy and in Europe. tomorrow’s consumer experience. In 2019 the retail distribution channel will exceed 50% of Basic total turnover for the first time. 44 | ChiFocus siamo in Oxford Street The store shopping. online and store physical integrates which strategy, omnichannel of the implementation the in step important an reach –and its 55 to expand plans has stores already and brand the where –amarket new UK Oxford the The in store Street is Benetton’s outpost ones. traditional the counters, replacing of aseries cash with up store ending of the floors the through unfolds that like aribbon of by stairs – connected aflight kidswear and womenswear to menswear, –dedicated floors three freely the through walk Consumers can content brand. of the significant most the view and entire collection the with use to interact can customers that of touch tables Aseries magazines. design and read books and relax can A lounge, where customers knitwear. of Benetton universe the presents staff where dedicated lab, is aknitwear There store concept experience. to offer brand atotal goes beyond traditional –that the stone iron wood, and such as materials natural with meters –furnished square of area Once inside, 1500 free are people atotal to explore Fabrica. by designed contents interactive of screens LED lining projects innovative the while architecture, atwelve-meter-high counter-façade classical of street, arches recalls the On London. store in Benetton 15, March On 2018, Group opened anew the city. the in hub is set to become that area evolving akey commercial of an store is part the Road, Tottenhamon Court underground station Line close new to Elizabeth the side of Oxford Street, east the on Located

45 | Chi siamo 46 | Our brands network. commercial brand’s of the majority to the extended was format the Subsequently, efforts. repositioning brand’s the to reflect rebirth, creative and artistic of cultural, symbol city the Berlin, 2014 in opened was store in Rich&Raw first The flooring. wooden vintage and components metal walls, brick like exposed elements, raw –with surfaces lacquered and glossy wainscoting, mirrors, marble, –like brass, elements rich Dreamers The movie, Bertolucci’s by Bernardo Inspired Stores footwear. and accessories sweaters, t-shirts, knits, trousers, shirts, include also collections The men’s women’s and jackets. dresses women, and for men outerwear and denim keySisley’s are items to it. applied technologies new the in and sector textile the in development and research by ongoing guaranteed ratio, price-quality excellent an with and frills no with style refined is Sisley fabrics. and colors accessories, of its style the in approach avant-garde its expresses Sisley generations, younger attract that phenomena to the Sensitive identity. recognizable and for asearch astrong also but alook, only not represent and fashion of global contents and trends latest the reflect women’s and collections men Sisley’s Collections prices. affordable at products for fashion searching consumers demanding of more niche to agrowing thanks years last the in proved positive which segment, market bridge the in brand of the repositioning the continue and product of the quality perceived the to is increase objective The styles. contemporary like to explore Both hedonist. and ambitious man the sensual, and modern is woman The lifestyles. dynamic and by urban of reference characterized is target Today, brand’s the segment. market bridge the in brand lifestyle urban 2014, an Since as years. the repositioned brand the 1974 in Group over by Benetton acquired further evolved was and Sisley for women, brand adenim ‘60sthe as in Founded trends. fashion latest the interprets creatively that brand clothing contemporary and asexy is Sisley Sisley concept juxtaposes store Rich&Raw , Sisley’s Russia. in Turkey two and in six France, in eight Korea, in five Italy, in were opened in distributed stores 700 approximately Today, has Sisley community. Patrignano San of the members of the work the with together Ricci Giorgia artist and Fernández Carlota Gala of designer work the displayed Babila San of Piazza stores Sisley of the windows shop the Week, Design for Milan the April, In windows. shop dedicated with stores its in activities commercial and dozens 2018,of events In organized brand the community. fan growing the with interactions social the and activities online the with integrated is and Sisley with synonymous is that style irreverent urban, rhythmic, the capturing in succeeded campaigns ad recent the light, this In coolness. and contemporaneity of seduction, mix acaptivating with universe brand’s the reflects advertising strategy, adopted newly Sisley’s In media. social the and media traditional channels, digital the stores, the through experience brand ongoing engaging, afully receive Consumers codes. and tools modern exploiting and events music in participating artists, famous world with collaborations launching way, irreverent and original an in targets consumer its with relations established –has excellence par brand unconventional –an Sisley start, very From the Experience the main global markets. In 2018,

15 Rich&Raw

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multibrand stores. retail corners in specialist distributedbe in also dedicated which will shoes, and handbags the offering of accessories, 2019 will the brand increase bridge market in segment, repositioning process in the Consistently with the Guillermo Tragant. theor Argentine illustrator Carlota Fernándezdesigner Gala collaborating with like artists located in different countries, activities in Sisley stores organize events commercial and 2019,In the Group intends to

47 | Our brands A design company

Even more than a synonym of style, the word design indicates an approach to project planning that combines creative research and functionality with a view to creating innovation.

This is why design has always been one of Benetton Group’s core values since the very beginning. From the intuition of developing a yellow sweater, an unprecedented product, to experimentation in the digital field and interactivity, every activity implemented by the Benetton Group has always been and remains a step ahead of the market and society at large.

Today, this approach translates into a series of projects and initiatives revolving around our products, our communication and our business model. Product research • Jean-Charles de Castelbajac • Garment dyed • Long Cotton • Hygroscopic fleece • Benetton archive • Focus: Dress Safe Digital innovation • E-commerce • Omnichannel • Content Factory • Digital marketing • RFID technology A design company | A design company A design company | A design company 50 51

Priority to ideas • The campaigns • Fabrica • Focus: Fabrica Circus Product research Benetton Group is a universal synonymous for innovation. It all began in 1965, when Luciano and Giuliana Benetton had the intuition of producing brightly colored sweaters, overturning the grey or brown color trend of those years. The Group then went on, over the years, to propose a series of innovations that contributed to the evolution of the fashion industry. Dress Today, innovation continues with a series of projects and initiatives that begin with researching new materials and finish treatments, the analysis of more efficient and sustainable processes and the intuition of new aesthetics, capable of interpreting fashion trends while remaining loyal to our brands’ DNA. Safe

Jean-Charles de Castelbajac Hygroscopic fleece “Dress Safe” is Benetton Group’s project designed In October 2018, Luciano Benetton appointed In 2018 we added an exceptionally comfortable to raise awareness and reassure consumers about Jean-Charles de Castelbajac as Artistic Director sweatshirt to our men’s and women’s collections. garment quality and safety, especially with regard to of the menswear and womenswear collections Developed exclusively by Benetton, the sweatshirt kidswear. for the United Colors of Benetton brand. Castelbajac is made of a yarn with outstanding hygroscopic has had a long career, ranging from design to painting, characteristics, i.e. the ability to absorb water Attached to all children’s products of United Colors from advertising to street art. He has inspired fashion and moisture, and thermal insulation, i.e. the ability of Benetton, and all the Sisley Young and Undercolors trends such as the “anti-fashion” movement and to protect from both heat and cold. of Benetton collections, the Dress Safe tag certifies that the garments have been tested the alternative use of objects to decorate garments. and controlled according to the materials they are made of and their characteristics. Developing at a crossroads between punk and pop, Benetton archive his style is characterized by the use of bold colors Benetton Group’s history of innovation is stored Entrusted to independent laboratories, selected from among the most prestigious and pop icons, combining the mix of old and new with in its archives. Developed in 2009, it contains a in the world, the tests verify that the products meet the most stringent safety an irreverent and extravagant touch. Castelbajac’s selection of iconic knitwear items – taken from the parameters in the field of textile sustainability. project for Benetton is to create the wardrobe of product archive which including 12 000 historical tomorrow, bringing beauty and style to everyday life garments – as well as sketches, paper patterns from Another series of tests carried out during the design stage ensures that garment | Focus A design company | A design company at affordable prices. the late seventies to the present day, technical cards, accessories – especially the small accessories such as buttons, sequins, buttonholes, 52 53 color and material charts – catalogues, advertising trim and lace – do not present any danger of suffocation or entrapment for children. Garment dyed materials, periodicals, press reviews – from the origins In the 1960s, Benetton was a worldwide pioneer to the present day. Dress Safe evolves over time thanks to an open and transparent dialogue with in garment dyeing: the idea of producing raw yarn consumers and the ambition not only to comply with international standards, but, knitwear and then dyeing it based on order quantity The Benetton archive is not a museum, but where possible, to achieve even more challenging goals. was a huge commercial success. a workshop from which designers and colleagues A guarantee for long-lasting and soft-touch items, draw inspiration, day after day, for new projects. garment dyeing is still used in 40% of our collections. In November 2018, the archive opened its doors to the public during the 17th Week of Business Culture Long Cotton promoted by Confindustria. The Undercolors collections for 2018 confirmed the use of long fiber cotton. Its filaments exceed

28 mm in length and thus result in a more resistant, Tests 2018 43 891 softer and refined fabric than normal. Along with on products our know-how in the field of materials, long fiber cotton in combination with an elastomer fiber enabled us to manufacture one size fits all underwear items 2017 40 873 for women and other products in different sizes for men and children. 2016 41 115 Digital Priority innovation to ideas Today, all links in the supply chain of a large company like the Benetton Group involve the use of digital channels. Ideas are a key ingredient in the business plans of the world’s largest companies. In this regard, the Benetton Group was a pioneer with the development of Fabrica in 1994, a non-conventional research center, established to Benetton Group has always paid close attention to the communication potential of its digital channels and study different subjects with a multidisciplinary and global approach. in recent years it has invested massively in the optimization of its e-commerce platform in the framework of a multi-channel strategy that aims to offer consumers a global purchasing experience that starts with the Today, Benetton Group continues to experiment with new ideas. Some provide key support to our brands in terms smartphone and continues in the web site and in the stores. of communication, product and store design. Others reflect free and fundamental research activity to anticipate the inputs that will drive tomorrow’s world. E-commerce Digital marketing Back in 2017, United Colors of Benetton had already Over the past year, we have implemented storytelling The campaigns Non fate i bravi implemented an e-commerce system inside its website initiatives to communicate our brands and attract new A priest kissing a nun. A newborn baby with the From January 18 to 21, 2018, Benetton organized an benetton.com. At the beginning of 2019, average data customers through all digital touchpoints by leveraging umbilical cord attached. A giant condom on the obelisk exhibition in the setting of Pitti Bimbo in Florence with showed positive double-digit growth on a year-on-year on marketing campaigns and activities dedicated to of Place de la Concorde in Paris. The campaigns of the images of children taken by Oliviero Toscani for basis. In 2018, dedicated UCB and Sisley e-commerce increasingly specific and defined consumer targets. United Colors of Benetton developed by Fabrica have Benetton, from the ‘80s to date. On display on a three platforms were launched in the United States. become part of collective memory and of the history meter long rack in the courtyard of Palazzo Strozzi, the RFID technology of advertising globally. photographs also included the latest images taken by Omnichannel We have equipped our products with RFID technology, Toscani for the Benetton kids Spring Summer 2018 In line with the previous year, also in 2018 the Group i.e. electronic tags that identify them and store the most In 2018, our brand communication reached and collection. continued to focus on digital activities and, specifically, relevant information. RFID technology has obvious captured the attention of billions of people all over the on the development of the omnichannel strategy, applications in the field of warehouse management world. Here are some of our communication activities. Benetton Race - Wanted Creativity designed to increase sales and reduce stock by and anti-shoplifting and its application will expand in the From November 9 to 11, 2018 in Paris and from increasing the offering of customer-oriented services. future to provide customers with additional information Naked, Just Like December 14 to 21 in Milan, the shop windows The omnichannel strategy favors integration between on product origin, fit and communication. In August 2018 United Colors of Benetton launched of the United Colors of Benetton stores were offline and online stores through the following the campaign “Naked, Just Like”, with a photograph turned into photoshooting sets, with passers-by functions: product locator, which enables customers by Toscani showing nine naked bodies united in a hug, and city residents as models. Oliviero Toscani, A design company | A design company to know in which store they can find a specific product; a symbolic antidote to barriers, hatred and racism. Settimio Benedusi and a team of photographers | A design company 54 The Group will develop a 55 click&collect, which allows customers to order a dedicated expertise center The image, together with a video, was accompanied by from Fabrica invited passers-by to join the product online and pick it up in the store; endless aisle, to optimize and concentrate a text inspired by St. Francis’s Canticle of the Creatures. photoshooting. The photos were then projected which enables customers in the store to buy a specific the management of on the large screens of the shop window. The initiative product which is not momentarily available and then currently open markets at The Sisley Way also included a side activity that made it possible pick it up at a later time; product return, which allows its headquarters along with In 2018 Sisley launched The Sisley Way, a new campaign for young creative talents in the two cities to present customers to go to the store to return or change the definition of a global format in which the brand presents its collections their work and apply to join the Fabrica team. a product bought online. expansion strategy for the through a series of travel diaries inspired by the Sisley two brands, United Colors Diaries of the 1980s but designed to communicate with Content Factory of Benetton and Sisley. the social feeds of millennials. Ryan McGinley is the In 2018 we laid the foundations for the development photographer called on to interpret this concept, an of the content factory, a platform for producing internationally renowned photographer famous for his and sharing product and collection content, such portraits of NYC Lower East Side’s young skaters and as technical descriptions, images and videos. The In 2019, the United Colors of artists. The Spring Summer 2018 campaign was shot in content factory is designed to facilitate communication Benetton website will undergo Los Angeles, while the Fall Winter 2018 campaign was in a unique and consistent manner across multiple a complete restyling to improve shot in New York. channels and different markets. user experience and navigation. A new website is expected to be launched in 2020. Fabrica Wanted Creativity per Kartell degree, through training projects recognized by the Fabrica is Benetton Group’s communication research On the occasion of Milan Design Week, Fabrica Veneto region and the Italian government. Fabrica center. It is located in the 17th century Venetian villa, accepted Kartell’s invitation to participate in “Crossing also offers training courses financed by European restyled by architect Tadao Ando in the ‘90s. Since Generation”. Inside the Kartell flagship store in Milan, funds to young graduates residing or domiciled in the its establishment in 1994, it has welcomed over 700 the Papyrus chair became the stage from which to Veneto region, holding at least a secondary high school creative talents under 25 from more than 65 countries broadcast “Wanted Creativity”, Fabrica’s call for young diploma. The Educational Center’s status was confirmed in five continents, including photographers, illustrators, creative talents. Fabrica, “enveloped in the hug” in 2018 after completion of the audit performed in artists, writers, copywriters, directors, musicians, of the Kartell chair, was projected through a screen February, with updates in December. videomakers, journalists, graphic designers, developers, broadcasting the call for the search for new Generation hackers and designers. X talents. Training The collaboration between the Municipality of Villorba In 2018, Fabrica also launched a series of research Agile work week and Fabrica continues with the training project financed projects with the objective of analyzing, investigating Among the various events hosted during the year, by the Veneto Region, i.e. Regional Decree No. and interpreting the forces that are making up the on May 21 Fabrica hosted the conference “Working 1904/2011 “Fotogrammi veneti, i giovani raccontano present with a view to the future. Here below are the time and quality of life: the future of organizations”, an - G.I.F.T. Giovani, Innovazione, Futuro e Tecnologia” most important ones. initiative promoted by the Veneto Region that was part (Venetian images, the young tell their stories; Youth, of the Agile Work Week, developed to raise awareness Innovation, Future and Technology), which provides Paradigm and Confessions and involve an increasing number of companies and free training and hands-on courses for young people During “Reciprocity Design. Liège”, an international male and female workers on the work-life balance issue. aged 16 to 29 helping them acquire multimedia skills Fabrica will continue its series triennial exhibition that promotes debate on the through the development of an audiovisual product. of meetings, conferences economic and cultural role of design, Fabrica presented Library The new orientation, revolving around the sounds of and workshops. Among the two exhibitions: Paradigm, a visual exploration of The Fabrica library comprises over 7 000 books technology, was presented at Fabrica and will be carried guests scheduled for 2019 essential human needs, presented during the design on photography, industrial design, arts, graphic design out in 2019. are British photographer week, and Confessions, a series of self-portraits and subjects connected to visual communication, Martin Parr, Spanish designer A design company | A design company A design company | A design company of the Fabrica team members and their vision a collection of reference texts and a broad variety Patricia Urquiola, French street 56 57 of themselves, presented from October 5 to of international magazines, as well as more than 400 artist JR and Italian artist November 25 in Liège, Belgium. music CDs from all over the world and over 600 In 2019 Fabrica will launch Maurizio Cattelan. On April 6 videocassettes and DVDs. It is open to the public Camera Oscura, a video format and 7, Fabrica will host Con- Documentaries by appointment and the catalogue is available on of visual and critical analysis fusion, a festival dedicated to In 2018, projections of Fabrica’s documentaries the Fabrica website. of images. Stimulated by integration. continued, including Devil comes to Koko by the Oliviero Toscani and his team, Italian-Nigerian director Alfie Nze; Beatrice, a short film Educational Center people born after 2000 (and by Venezuelan filmmaker Lorena Alvarado regarding the Fabrica is an Educational Center recognized in not only) will be invited to Paralympic champion Bebe Vio; Notes from Anywhere accordance with Regional Resolution No. 359/2004. describe themselves through by Drew Nikonowicz with Mattia Mura and Floating It is therefore a structure suitable for providing training their imagination. Islands, an animated work on the theme of migration by to young unemployed and non-employed students Dominican illustrator Tómas Pichardo-Espaillat. with secondary high school diplomas and/or university Starting from March 2019, Radio Capital will broadcast “Fabrica” on Sundays, a new radio program featuring Oliviero Toscani and Nicolas Ballario, dealing with topics like moms, fear, beauty and ugliness, God, the future and much more. Fabrica Circus Launched in 2018, Fabrica Circus is a continuous cycle of conferences, workshops, performances, meetings and discussions with international artists and professionals on humanistic culture, communication, gastronomy, cinema, art, poetry, journalism, design, spirituality, nature, music, politics, economics, neurosciences, psychology, writing and editing and theatre. In 2018, Fabrica invited 120 international guests, including architect Michele De Lucchi, musician Michael Nyman, illustrator Javier Mariscal, astronaut Samantha Cristoforetti, photographer Franco Fontana, Eike Schmidt, director of the Uffizi Galleries and journalist Gad Lerner. These professionals and intellectuals were key speakers at conferences and workshops that attracted a heterogeneous public both in terms of geographical origin, professional profile and age.

| Focus “High on subversion” (March 23-25) was one of the events organized, three days of 58 non-stop creativity to discover the meaning of subversion in art, design, cinema, advertising, politics, economics, architecture and contemporary media. Another event was “Space and Earth DNA” (October 24-25), two days in which international experts discussed topics such as our relationship with machines, Space and planet Earth, managing sustainable cities, intelligent clothing and exploration of the universe. Speakers included Dava Newman, professor of astronautics for the Apollo program at the Massachusetts Institute of Technology (MIT) and Paolo Nespoli, astronaut for the European Space Agency (ESA). A people company

Benetton Group believes in a society centered on the individual and acts in full respect of diversity, free of prejudice about skin color, gender, sexual orientation and political or religious beliefs.

Aside from being the key concept of the Group’s globally renowned advertising campaigns, this idea has always inspired the work we do every day. We look after our employees, because the wellbeing and growth of the men and women who work for us is a key element of the Company’s success.

Furthermore, we are also active in developing initiatives to protect human rights, concentrating on the most vulnerable members of our society, like children, women and migrants.

Human resources • Benetton for You • Ponzano Children • Training • Employer Branding • Reward • Industrial relations • Zero Injury Objective • Focus: Mittelmoda International Lab | A people company | A people company Human 62 rights 63

• Supply chain management • Social communication • Women’s empowerment in India • Focus: The new faces of an Italy that studies and works 2018

31.0% 37.6%

14.3%

47.4%

48.1% Human 21.6%

Italy resources Europe Rest of the world A global company like Benetton Group, with over 7 500 employees and 4 700 stores in more than 70 countries For this reason, also in 2018 we developed and the dates with more than 250 participants, was very worldwide, knows that human resources are key to building success. increased the number of initiatives addressed to our successful and will be repeated in 2019. employees’ wellbeing and requests in order to attract 2018 2018 new talents and reward those who already work with us. Stretch Stretch is a flexibility project that offers employees 31.0% 37.6% Benetton for You more flexibility in organizing their working hours 73.8% Benetton for You is the People Care program that (Stretch your Time) and the possibility of working from the Group launched in 2015 to promote employee home one day a week (Stretch your Space) for all 14.3% wellbeing in the central offices of Ponzano and compatible positions. The initiative, introduced in 2016 90.4% Castrette, extending its benefits also to employees’ and further extended during 2018, aims to promote a 47.4% family members. The program is extended to all culture of results through a more agile way of working, employees of the Italian offices, regardless of their based on delegation and mutual trust. 48.1% seniority and employment contract, while abroad the Group launched local People Care initiatives Nice to Meet You 21.6% 26.2% 9.6% to respond to country-specific needs. Nice to Meet You is a day dedicated to our The program covers four areas: work/life balance, employees’ children. Now in its third edition in Italy Permanent health, family and savings, with each area including 2018, the initiative involved 25 young graduates, Europe Temporary several annual and multiannual projects. undergraduates and recent graduates, who were Rest of the world given a chance to visit the Company’s key locations Banca Ore Etica and receive information and guidance from Benetton’s In 2018, the Benetton for You program was enriched Recruiting & Talent Acquisition office regarding how Employees by geographic area by an important solidarity initiative: Banca Ore to face the world of work and perform well in job 2018 2016 799 1 779 199 2 004 1 107 1 387 7 275 Etica. Introduced in September 2018 in application interviews. of the supplementary Company agreement, Banca | A people company 2017 7 505 | A people company 797 1 918 274 2 414 911 1 191 Ore Etica is a tool consisting of holidays and leave English for You 64 65 201873.8% 733 1 722 278 2 640 937 1 200 7 510 permits donated by employees, on a voluntary basis, English for You offers a series of English language in favor of colleagues who are in particular situations courses at different levels for employees and their

Italy 90.4% Europe Rest of the world of need. The Company participates in the collection family members at discounted prices. by contributing an equal number of hours for each Men Women donation. Employees who have special health care needs or whose family members do and who have already exhausted all their hours of paid leave and GRI 102-8 Employees26.2% by:9.6% leave accrued, may benefit from these hours of 2016 2017 2018 solidarity. Each request is examined by a dedicated Men Women Total Men Women Total Men Women Total committee and treated strictly confidentially. Permanent Employment contract Temporary Permanent 1 660 3 882 5 542 1 728 3 898 5 626 1 761 4 105 5 866 Open Day Archive Temporary 256 1 277 1 533 254 1 625 1 879 1 87 1 457 1 644 The Benetton Studios and archive were opened on Other 189 11 200 0 0 for four evenings to Benetton Group employees, their Total 2 105 5 170 7 275 1 982 5 523 7 505 1 948 5 562 7 510 families and friends. This was an opportunity to take Employment type part in a special guided tour of the Benetton archive, Full Time 1 770 3 042 4 812 1 709 3 149 4 858 1 688 3 1 6 4 4 852 which preserves the Company’s historical heritage, Part Time 334 2 126 2 460 273 2 374 2 647 260 2 39 8 2 658 and of the exhibition area, which hosts a selection Other 1 2 3 0 0 of images of the Group’s advertising campaigns and Total 2 105 5 170 7 275 1 982 5 523 7 505 1 948 5 562 7 510 Formula 1 cars. The event, which was sold out on all ripartizione per età ripartizione per età ripartizione per categoriaripartizione per categoria

792 792 251 251 2.884 2.884 45 45

7.214 7.214 ripartizione per età -ripartizione donne perripartizione età - donne per età -ripartizione uomini ripartizioneper età - uomini per età -ripartizione donne perripartizione età - donne per età -ripartizione uomini per età - uomini 30,2% 30,2% 41,3% 41,3% 0,1% 0,1% 2,1% 2,1%

50,6% 50,6% 88,2% 88,2% 51,2% 51,2% 98,8% 98,8% 7,5% 7,5% 19,2% 19,2% 1,1% 1,1% 9,7% 9,7%

nero: < 30 anni nero: < 30 anni nero: manager nero: manager grigio chiaro: 30-50 grigioanni chiaro: 30-50 anni grigio chiaro: white grigiocollar chiaro: white collar grigio scuro: > 50 annigrigio scuro: > 50 anni grigio scuro: blue collargrigio scuro: blue collar

Benetton Group: 2018 - rBipaenetrtizioneton G deiroup: dipende 2018n -ti ripartizione dei dipendenti • per età • per età • per categoria • per categoria Benetton Group: 2018 - Employee breakdown Welcome Back, Mom maternity leave, with a dedicated coaching path to help Also in 2018, the Welcome Back, Mom project them find a new work/life balance. The path includes • by age + + • by+ qualification + continued, focusing on the value of the Company’s four two-hour meetings and two group workshops. In 251 45 251 45 792 792 female employees. Launched in 2015, this project 2018, 31 mothers participated in the project for a total assists moms when they come back to work after of 177 training hours. 0.1% 2.1% 0.1% 2.1% 41.3% 30.2% 41.3% 30.2% GRI 401-3 Return to work and retention rates of employees who took parental leave 2 884 2 884 7 214 7 214 Italy Europe Rest of the world Total Employees entitled to: 51.2% 50.6% 51.2% 50.6% 98.8% 88.2% 98.8% 88.2% 3 834 3 834 Maternity 76 925 123 1 124 Paternity 20 128 30 178 7.5% 19.2% 7.5% 19.2% 1.1% 9.7% 1.1% 9.7% Total 96 1 053 153 1 302 Employees who took a parental leave Maternity 76 168 36 280 < 30 years Manager < 30 years Manager Paternity 20 1 11 32 31-50 years 31-50 years White collar White collar > 50 years > 50 years Blue collar Blue collar Total 96 169 47 312 Return to work after parental leave ended GRI 405-1 Employee breakdown by qualification, gender and age Maternity 50 96 19 165 Age Italy Europe Rest of the world Total Paternity 20 1 11 32 Manager Total 70 97 30 197 Men < 30 years Maternity 66% 57% 53% 59% 31-50 years 9 1 6 16 Paternity 100% 100% 100% 100% > 50 years 20 2 3 25 Total 73% 57% 64% 63% Total Men 29 3 9 41 Retention rate – employees who returned to work after parental leave ended and still working 12 months after their return Women < 30 years Maternity 15 95 29 139 | A people company 31-50 years 2 2 Paternity 11 1 9 21 | A people company

66 > 50 years 2 2 Total 26 96 38 160 67 Total Women 4 4 Maternity 88% 57% 81% 75% Total 33 3 9 45 Paternity 100% 100% 82% 94% White Collar Total retention rate 93% 57% 81% 77% Men < 30 years 56 136 395 587 31-50 years 320 105 453 878 La Ghirada area. An educational service that hinges on building > 50 years 200 26 28 254 Also in 2018, Group employees and their families relationships, research, the wellbeing of children and the Total Men 576 267 876 1 719 had access to advantageous rates for the summer community, following the guidelines set by the nurseries Women < 30 years 401 1 228 663 2 292 camps organized by La Ghirada - Città dello Sport, and kindergartens of Reggio Emilia. Ponzano Children 31-50 years 1 025 1 301 499 2 825 the 22-hectare sports complex built in Treviso by the is located in a building designed by the Spanish architect > 50 years 240 103 35 378 Benetton family. Alberto Campo Baeza. Today, it includes five sections Total Women 1 666 2 632 1 197 5 495 Total 2 242 2 899 2 073 7 214 for different ages, of which two for infant day care, Blue collar Ponzano Children one nursery school and two kindergartens, with a total Men < 30 years 2 2 Founded in 2008, Ponzano Children is a children’s capacity of approximately 100 children aged from nine 31-50 years 48 5 38 91 center to host both the children of employees and months to six years. > 50 years 80 1 14 95 children of Ponzano and other municipalities in the Total Men 128 8 52 188 Women < 30 years 3 3 31-50 years 15 4 3 22 > 50 years 37 1 38 Total Women 52 8 3 63 Total 180 16 55 251 TOTAL 2 455 2 918 2 137 7 510 Training Office training to increase the efficacy of the selling process through offered by our In-Store Training Academy. The 40 In 2018, more than half of our Company’s population Office training included Excel and PowerPoint courses, interaction with customers based on simple and colleagues from the London Store were involved was involved in training and development initiatives. This divided into basic, intermediate and advanced levels, for immediate criteria. In 2018, 31 editions of Selling in in two days of training and discussions in order to percentage increases to 70% if we also consider the a total of ten editions. Office training courses involved Colors were organized in Italy, involving a total of 367 deepen their knowledge of our target consumers staff of the directly operated stores. Benetton Group’s 91 colleagues for a total of 1 280 hours of training. people, including store personnel and FOS partners, and thus increase sales performance. The Green Camp main projects dedicated to staff training include a and a total of 137 resources from directly operated was in fact dedicated to store managers and analyzed portfolio of courses that range from leadership Language courses stores (DOS). issues including product, selling techniques, visual to language courses and from the development of In 2018, the Core English training program (individual merchandising and people management. soft skills to technical-specialist training. The training and group English courses) continued. In addition, We Love Sisley Journey activities catalog is designed by our Education, Growth a new course “ESP_English for specific purposes” The focus of this journey is the Sisley consumer BEST & Engagement department and includes training, was introduced, focusing on public speaking skills. target. This course evolves from the proposal of the Launched in September 2017, BEST (Benetton development and engagement initiatives. The training courses involved 183 colleagues for ten golden rules to support store personnel in the Engagement and Store Training) is the interactive digital Most of the initiatives are shared with foreign a total of 1 663 hours of training. development of customer relationships on a daily basis, platform dedicated to DOS and FOS store personnel. subsidiaries, which take action to customize the while conveying to final consumers the brand’s soul and In 2018, the platform supported the main training programs and engage employees locally. BOB identity. In 2018, two editions were organized involving and business projects, such as Ominichannel, with a Benetton on Boarding (BOB) is a welcome program colleagues from the head office and the DOS and dedicated section, and Selling in Colors, with a schedule People in Colors dedicated to newly hired employees and includes FOS stores; a special edition was also dedicated to the of content and exercises designed to involve the entire In 2018, colors represented one of the main drivers a series of eight digital books, developed to provide Store Managers of the TOP DOS stores for a total of sales network. In addition, the platform was enriched in the Group’s projects dedicated to mindfulness and all the basic information and instructions regarding 41 people and 436 hours of training. with a glossary of fashion terms that currently includes relationship development. In particular, we introduced the organization. 80 entries. A total of 115 contents, 1 113 comments, People in Colors, a model that identifies in each person Omnichannel 16 videos and 124 photos were published. four cognitive styles or ways of thinking and acting, each In addition to on campus training, training is also The training plan represents a key step in the of which corresponds to a color: blue, yellow, green and provided to store personnel through our Retail implementation of the Omnichannel strategy. In red. Nine editions of People Management in Colors Academy, which involves personnel from both the particular, between June and November, training was In 2019, we will launch an | A people company and Self-Efficacy in Colors were developed, involving Directly Operated Stores (DOS) and the Franchising provided to all pilot stores – located in the Lombardy important sales support plan | A people company 68 69 144 colleagues for a total of 1 268 hours of training. Operated Stores (FOS). In 2018, store-specific region, Padua and London – with regard to the dedicated to the Fall/Winter training initiatives focused on the restyling of the Sales product locator and endless aisle services, launched 2019 collection. A series of Ad hoc specialist training Training program through the implementation of the in correspondence with the training. In December, training stores will be selected Dedicated technical and specialist training initiatives “Selling in Colors” projects for the United Colors of click&collect and return in store services were rolled to provide numerous training were developed for some corporate functions, in Benetton and “We Love Sisley Journey” for Sisley. The out for just two stores. In 2018, 95 resources were sessions. particular in the AFC, Logistics, Retail Design and Visual consolidation of BEST and the dedicated Omnichannel involved in the Omnichannel strategy training, including Merchandising areas. These training courses involved project were important innovations in the Group’s store personnel and partners (DOS, FOS, IOS) for a 53 colleagues for a total of 612 hours of training. Store 2018 training program. total of 676 hours of training.

Selling in Colors Green Camp - London In 2019, the People in Colors Selling in Colors is a training course designed to On the occasion of the reopening of the London project will be extended to all provide support to store personnel in their daily Store in Oxford Street, we developed a Green Camp the colleagues of our offices, relationship with customers. Based on the People focused on the distinctive elements of our Company with a specific focus on the in Colors model, its objective is to facilitate the and our brand. The Green Camp combines the essence of our Brands. recognition of the different types of customers presentation of the collection at the stores, from entering the stores by offering an additional tool a sell-out perspective, with training on other topics UP Strategy Act-In Class – University of Padua excellence at international level. In 2018, the Recruiting In 2018, the UP talent management strategy of our In September 2018, we launched the Act-In Class & Talent Acquisition Team held a conference for In 2019, we will launch directly operated stores was further consolidated, Project in collaboration with a group of students Master’s students dedicated to job orientation and first “Undercolors Of Creativity” a combining moments of assessment of one’s potential from the Faculty of Management Engineering of job search. project in collaboration with IED (Growing UP), and one’s performance (Performing the University of Padua. The group, made up of in Rome, in which five students UP) as well as training activities by role (In Store UP). seven students, worked on aspects regarding the Master Creative Knitwear Design of the second year of the Fashion In particular, in 2018 the strategy involved a total of development and planning of collections, analyzing Also in 2018 we hosted the students of the Master in Design course will work for 36 resources in three paths divided by role: My Store them directly with the people of reference of the Creative Knitwear Design of the Academy of Costume two months on the design of a for 12 UCB Store Managers; My Floor for 14 Store Company departments involved: Supply Chain Planning, and Fashion in Rome at the Studios and the Seamless Capsule Womenswear Collection Department Managers; and Visual Paths for 10 In-Store Merchandising, Sales Planning, Master Calendar, Knitwear Area. After receiving a creative briefing from by United Colors of Benetton, Visuals. In almost all cases, these initiatives referred Sourcing. The project and the presentation of the ideas our knitwear design team, the students designed with a focus on the Homewear to internal upgrades, thus enhancing the Company’s by the students were useful both to meet new talents a capsule collection inspired by United Colors of and Loungewear product know-how. and to bring new insights and ideas to the Company. Benetton. Giuliana Benetton selected the two best categories. projects, which will be produced and sold in our stores. Employer Branding Master MFI – Milano Fashion Institute The two winners, Dario Tubiana and Lisette Estefania In 2018, Benetton Group participated in numerous Founded in 2007 by three Milanese universities Bazan, will also have an opportunity to spend a month employer branding initiatives in close collaboration with – Bocconi, Cattolica and Politecnico – the Milan at the Company during the design of the collections leading schools and universities. The aim is to attract Fashion Institute is an inter-university consortium for that will be presented at Pitti Filati in January 2019 and As part of the Mittelmoda new talent with a view to renewing and diversifying higher education in the field of fashion, whose goal participate in an internship in the knitwear design office. District project – an event human resources. is the creation of a multidisciplinary training center of dedicated to professional fashion Digital Recruiting institutes – in 2019 we will GRI 404-1 Average year training hours by employee and gender We received more than 66 000 visits on our Work welcome 300 students from six Training hours 2016 2017 2018 with Us web page and on our LinkedIn page, and schools in Friuli, who will visit Men Women Men Women Men Women our Company headquarters. Italy over 40 000 resumes. Today, candidates can send | A people company Total training hours provided 16 659 9 735 12 490 their curriculum vitae directly from any store thanks | A people company 70 71 Training hours by employee 7 4 5 to the QR code technology. of which provided to: 5 9 5 3 6 5 Europe Total training hours provided 20 919 6 977 6 448 Training hours by employee 9 3 2 The close collaboration with of which provided to: 10 7 3 3 2 2 the Milan Fashion Institute Rest of the world will continue also in 2019: the Total training hours provided 18 069 13 299 10 906 Recruiting & Talent Acquisition Training hours by employee 8 6 5 of which provided to: 10 8 7 5 4 3 team will meet the students Benetton Group of the different Master courses Total training hours provided 55 647 30 029 29 844 in a lecture dedicated to job- Training hours by employee 8 4 4 related issues. of which provided to: 9 7 7 3 6 3 Reward employees and key resources and a view to rewarding applicable for the 2018-2020 three-year period, we aspects that pertain to employee health and safety. In 2018, the Group’s remuneration policy was team results. The objective is motivating and retaining re-confirmed the criteria already applied in the previous Risk assessment, supplemented by the improvement focused on the implementation of a series of fixed the best resources already present in the Company year, for the determination of efficiency to define plan, is constantly updated by the Prevention and and variable components for the Group’s Italian and and in the stores, with a view to ensuring continuity performance bonuses. Protection Service, present in all Benetton Group foreign operations, with particular attention to young and medium-long term planning. companies, also in relation to organizational changes. As to notice periods relative to significant organizational Particular attention is paid to the management of Salary Gender Gap Index 2016-2018 - Italy changes, the Company recognizes the value of interferences with external companies engaged in collective bargaining as a privileged tool for determining setting up, providing services or maintenance activities, Headquarter Salary ratio Remuneration ratio 2016 2017 2018 2016 2017 2018 contractual conditions and for regulating relations with the concurrent optimization of the relevant between Company management and trade unions and documentation and the request made to such external Managers * 91% 100% 88% 85% 97% 85% confirms its full compliance with all national collective companies to comply with specific requirements Executives 95% 95% 96% 91% 93% 95% labor agreements (SMI Textile, Trade, Executives, regarding equipment, personal protection devices, White collars 90% 89% 90% 90% 89% 90% etc.). In the absence of National Collective Bargaining training and emergency management. Blue collars 98% 99% 98% 96% 98% 97% Agreements at the foreign subsidiaries, employment The dissemination of the culture of prevention takes Store Salary ratio Remuneration ratio relations are managed in compliance with national laws, place through basic training and advanced courses at all Executives 81% 83% 71% 78% 80% 66% with the expection of derogations that might be more levels, coordinated by the Prevention and Protection White collars 92% 93% 90% 91% 92% 88% favorable to workers. Service, taking opportunities for moments of dialog, * The manager category is referred to senior managers only. listening, evaluation of possible improvements both Zero Injury Objective during normal activities and in emergency situations Management by Objectives (DOS), the plan dedicated to the Group’s directly Benetton Group has always been committed to and with the analysis of accidents and “near misses”. In 2018, we formalized the Management by Objectives operated stores was revised with a view to effectively ensuring suitable workplaces for the performance Awareness raising activities are also organized to Plan (MBO), which includes the assignment of economic driving an approach focused on further improving of its business activities and implementing ongoing manage the residual risk of certain activities with the benefits to managers who reach specific corporate the sales performance of the points of sale by improvements and preventive actions to manage all delivery of specific safety instructions. targets, consistently with the Group’s strategy. Today, rewarding the best performers of the network with | A people company the plan is operating in 17 Countries and involves additional benefits. To date, over 2 300 people from | A people company 72 Injury ratios 73 over 120 managers, of whom 30% are abroad. The approximately 300 directly operated stores in Italy and plan’s structure and operation differentiates among Europe have received the benefits. GRI 403-2 Rates of injury at work, occupational diseases, lost days, absenteeism and number of work-related fatalities, broken down Corporate roles, linked to Group economic-financial by geographic area targets, and Country/Business roles, linked to Industrial relations Unit Italy Europe Rest of the world Total economic-financial perimeter targets. A three-year Another key element to ensure growth and the success 2016 Long Term Incentive Plan (LTIP) was also formalized, of Benetton Group’s human resources is the ongoing Injury rate No. of injuries/Hours worked x 1 000 000 10 14.93 20.16 15.05 with the objective of focusing Top Management in Italy and productive dialogue with trade unions. In 2018, we Lost day rate Lost days/Hours and abroad on the medium-long term business KPIs consolidated, in a very innovative manner, the content worked x 1 000 0.3 0.2 0.06 0.1 8 included in the 2018-2020 Business Plan. of our supplementary agreement for the 2018-2020 2017 period and of the relevant performance bonuses at the Injury rate No. of injuries/Hours Sales Incentive Plan national level. worked x 1 000 000 10.3 18.07 2.7 10.16 Lost day rate Lost days/Hours In 2018, the Group continued its efforts to standardize worked x 1 000 0.26 0.42 0.02 0.27 sales incentives for the Group companies’ commercial Organizational turnaround 2018 staff, differentiated by sales channel (DOS - IOS - In line with the previous year, in 2018 additional targeted Injury rate No. of injuries/Hours FOS), with an increasingly “glocal” (global and local) organizational turnaround actions were implemented worked x 1 000 000 12.23 18.53 2.27 11.3 approach in order to orient behaviors towards the in some areas of the Company, already started in the Lost day rate Lost days/Hours worked x 1 000 0.49 0.86 0.22 0.29 ongoing improvement of business performance. previous year, with extremely positive results in terms In particular, for the Franchising (FOS) channel we of productivity and rationalization of activities. consolidated a specific sales incentive plan for the channel-specific management and development roles Performance bonus for both UCB and Sisley. For the direct channel For the new second level supplementary agreement, Human r i g h t s

Peace, work, freedom of expression and equal opportunity: Benetton Group has always believed in a world where basic human rights are always guaranteed, without exception.

For over thirty years, our social communication campaigns have unfailingly reiterated this message. Today, the Mittelmoda effect of our communication echoes a series of concrete initiatives that we implement, covering our corporate headquarters and our suppliers, on a range of topics ranging from health to women’s empowerment and the fight International Lab against violence to respect for any sexual, political or religious orientation. Supply chain management regions where respect for human rights and workers In the summer of 2018 we hosted the Our first commitment in the field of human rights is is considered more at risk. Suppliers to be audited final event of the twenty-fifth edition to the people who work in the Group all around the are identified jointly by the CSR Management of Mittelmoda International Lab at the world. Over the years, we have implemented a series and the Operations & Sourcing functions, while the Benetton Studios of Castrette. of procedures and initiatives designed to ensure that operating organization for the performance of the all those involved in our supply chain are treated fairly audits is entrusted to the CSR Management function. Launched in the early ’90s, Mittelmoda and correctly. is an international competition for young Audits are carried out by globally recognized designers supported by some of the main fashion bodies, such as the Supplier selection independent auditing firms and based on a checklist Italian National Chamber of Fashion, Fondazione Industrie Cotone Lino We select our suppliers not only based on product developed internally according to the principles and Confindustria Moda, in collaboration with several companies, including quality, competitive prices and transparency, but also on contained in the Code of Conduct for Manufacturers. the Benetton Group. their compliance with social, ethical and environmental The checklist includes SA8000 Standard provisions and principles. A list of our active suppliers located all over is designed to verify working conditions, environmental The objective of Mittelmoda International Lab is to develop an international the world is available on our web site. protection, transparency and compliance with network of Art & Design schools and colleges to promote and foster the applicable local and international regulations. international creativity. Mittelmoda International Lab is a valuable opportunity www.benettongroup.com/sustainability/supply-chain/ In particular, Benetton Group is very sensitive to | A people company | Focus for meetings and aggregation, which is increasingly necessary to facilitate the the protection of human rights and has carried 74 75 professional and personal growth of young people. Code of Conduct out an internal analysis of potential risks relating Any individual or company that establishes a business to issues such as child and forced labor. On Friday, July 20, 23 finalist proposals from 17 countries around the world relationship with us undertakes to comply with the were presented in the Benetton Studios and evaluated by an international Benetton Group’s Code of Conduct, founded on No significant risks have been identified in the European jury, chaired by Matteo Marzotto, Mittelmoda president, and composed compliance with human rights and protection of Union, because the legislation adequately protects of experts and representatives of high standing fashion companies. the environment. The Group’s Code of Conduct workers’ rights and the compliance controls of the implements the most relevant international regulations, various bodies in charge are considered effective; as During the day, two Absolute Prizes were awarded to the most creative with particular reference to the UN Business and a preventive measure, Benetton Group is supporting and experimental collection, the Lectra Prize by the main sponsor of the Human Rights of June 2011 and the Communication its suppliers in formalizing procedures and sharing event, four Origin Prizes dedicated to the use of leather, stone, fabrics and from the European Commission on the Renewed some best practices. All suppliers located outside technology and, last but not least, two Special Prizes dedicated to the use Strategy on Corporate Social Responsibility of the European Union, on the other hand, present a of denim and cuprum. October 2011. For the benefit of active business significant risk in terms of respect for fundamental partners worldwide, the Code of Conduct is available human rights and are therefore subject to precise on our website in several languages. controls by means of audits.

CSR Audit The CSR Audit function carries out audits on all Benetton has implemented an audit program to producers of finished products regularly, repeated monitor adherence with the Code of Conduct for every six months as a maximum and every two years Manufacturers, which applies to all finished garment as a minimum, according to the results achieved and producers, with particular attention to those located in the need to correct procedures identified as critical in previous audits. In 2018, Benetton expanded controls management of their sites. More than 300 suppliers The non-conformities identified refer to procedural The main points of the agreement include: on these issues and mostly carried out unannounced were assessed for social impacts during the year. Of aspects, all of which were corrected during the year. • an independent inspection program supported by the audits, while also updating the main tools used for the these, about 60% undertook a process of correcting signatory companies, involving employees and trade management of the audit process. In addition, non-conformities, while 24 business relationships were Accord on Fire and Building Safety union associations; a periodic monitoring activity was introduced, which interrupted. in Bangladesh • transparent communication of the list of production provides for the forwarding of updated corrective plans In December 2017, Benetton Group confirmed its facilities, inspection reports and corrective action and evidence of the resolution of non-conformities on Non-discrimination adherence to the Accord on Fire and Building Safety in plans; a periodic basis in order to supervise the remediation While respecting the tradition and culture of the Bangladesh, launched in May 2013 following the event • the commitment of the signatory companies to process with a view to continuous improvement. Finally, countries in which our suppliers operate, Benetton that is universally remembered as “the tragedy of Rana ensure the effective implementation of the corrective to support suppliers in the operational implementation Group believes that every company must commit Plaza”. The Accord, of which Benetton was one of the action plans and to maintain ongoing business of the requirements of the Code of Conduct, the to rejecting any form of discrimination, ensuring first signatories, is an independent initiative involving relations; Guidelines for Benetton Group Code of Conduct for fair and respectful treatment of its people in all more than 200 clothing companies worldwide and • the establishment of democratically elected health and Manufactures were drafted, which sets out Benetton’s circumstances. In particular, in 2018, no employee also engaging trade unions, the International Labor safety committees in all factories to identify the main expectations for safe working conditions, while reports of discrimination were received through Organization (ILO) and various non-governmental risks related to workers’ health and safety; respecting workers’ rights and the environment. The aim the Whistleblower service. organizations. The Accord, developed to secure all • the development of workers through a broad-based is to make the Code of Conduct more understandable apparel manufacturing facilities in Bangladesh, also training program; and easy to apply, providing operational solutions and In addition, 93% of our suppliers meet the provides for independent inspections and transparency • the implementation of complaint mechanisms and the practical examples that can help suppliers in the proper requirements of our Code of Conduct in the matter. of the local textile supply chain. right to refuse to work in unsafe conditions.

Bosnia Croatia Hungary Albania Serbia Romania 2 suppliers 14 suppliers 2 suppliers 10 suppliers 7 suppliers 50 suppliers 50% assessed 100% assessed 50% assessed 40% assessed 100% assessed 82% assessed | A people company | A people company 76 77

Italy 126 suppliers 13% assessed Korea 27 suppliers 63% assessed Spain 10 suppliers 10% assessed

Portugal 12 suppliers 42% assessed China 103 suppliers Morocco 83% assessed Occasionally, Benetton 6 suppliers 83% assessed collaborated with a few suppliers India Laos Vietnam 2 suppliers 1 supplier located in France, Moldavia, Ukraine, 114 suppliers Tunisia 97% assessed 100% assessed 100% assessed Bulgaria and Brazil for the performance 113 suppliers Bangladesh of minor production processes. Given 88% assessed 17 suppliers the occasional nature of the relationship Turkey 100% assessed 62 suppliers Cambodia and the low level of risk associated with 55% assessed 6 suppliers these activities, no assessment was Myanmar 100% assessed carried out locally with regard to 5 suppliers Egypt 80% assessed the compliance of these plants with 11 suppliers the respect of human rights. 91% assessed 78 | A people company Rights. of Human Declaration Universal of the anniversary 70th the to celebrate proposals of creative aseries designed Fabrica Rights, for Human Commissioner High Nations United For the Rights of Human Declaration Universal world. the around actors different with dialog ongoing and a serious to build helping communication, to Benetton value and meaning given have scale aglobal on communicated been have not could otherwise that to causes support the and to solidarity committed concretely bodies with collaboration the themes, of social choice The Social communication to mitigate thesocialimpacts improvement were actions agreed inorder in relation withwhich to thecommunity social,realnegative andpotential impacts having significant identifiedas Suppliers in relation to thecommunity social,realnegative andpotential impacts having significant identifiedas Suppliers on theirsocialimpact screenedSuppliers based of which: Total no.ofsuppliers takenGRI 414-2Negative inthesupplychainandactions socialimpacts on theirsocialimpact Percentage ofnewsuppliersscreened based on theirsocialimpact New suppliersscreened based of which: No. ofnewsuppliers GRI 414-1 New suppliersthatwere screened usingsocialcriteria relations were terminated after assessment in relation withwhich to thecommunity social,realnegative andpotential impacts having significant identifiedas Suppliers order to mitigate thesocialimpacts which improvement were actions agreed in inrelationimpacts with to thecommunity social,real negative significant andpotential Percentage having ofsuppliersidentifiedas relations were terminated after assessment inrelationimpacts withwhich to thecommunity social,real negative significant andpotential Percentage having ofsuppliersidentifiedas

64.5% 45.2% 67.6% 2016 HIV. with live who people about of thinking way our to change designed Milan, in 10 Tazzoli, at Como Corso exhibition-show an in to participate Fabrica Toscani and Oliviero invited Association Solidarity AIDS ASA Day, the AIDS 1, of December 2018, occasion the On World the World Day AIDS women. and men between equality and to promote women’s empowerment designed of initiatives aseries launched India Benetton ago years some reason, For this inequality. gender is Italy, outside Group for Benetton market main the India, in ills felt social deeply most of the One Women’s empowerment in India 315 622 40 62 46 68 28 62.7% 76.7% 26.7% 2017

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81 | Chi siamo 82 | Chi siamo processes chain. entire supply the along of to efficiency improving the materials of raw from selection the activities: various involving continues initiatives commitment today,protection Our environmental with 1990s. since the launched has brand the that campaigns communication numerous the environmental or logo of United Colors Benetton green the on of the think Just Company’s of the DNA. is part Group’sBenetton to commitment sustainability day. every visible increasingly consequences becoming its and warming company, global todaya large with especially for requirements environment essential are the respecting and Understanding A green company

Sustainable materials

• Wool Towards • Sustainable cotton • Certified down a circular • Bio-based fibers economy • Rationalization of collections • Wasatex Project • Experimental treatments • Focus: B-Care A green company | A green A green company | A green 84 85 Management of environmental impact • Reduction in the use of chemical pollutants • Logistics • Focus: Detox Commitment • Headquarters and stores Sustainable materials

Consumers demand Benetton Group increasingly sustainable and quality products. For this reason, we carefully Sustainable cotton select the raw materials, preferring those with a reduced environmental impact. Today, 91% of the fibers in our From polo shirts to sweaters, from t-shirt to the garments are of natural origin and can therefore be disposed of without causing damage to the environment. Undercolors branded items, cotton is another In addition, about half of our garments are made of monofiber material, making recycling easier. fundamental fiber in our collections. For this reason, BCI we are committed to continuously increasing our sustainable cotton supply to produce quality items cotton GRI 301-1 Raw materials Unit 2016 2017 2018 with a reduced carbon footprint. Total t 27 065 22 851 19 077 Renewable Cotton* t 18 875 16 649 15 539 Organic cotton Wool* t 1 300 851 1 196 In 2018, organic cotton, cultivated according to the Linen* t 197 181 334 principles of organic agriculture with no GMOs and Mixed (natural fibers) t 154 169 234 with a lower carbon footprint, accounted for 4.7% of Non-renewable the overall production of all of our cotton products. Artificial fibers t 1 434 1 260 1 004 23% Mixed (natural/artificial/man-made fibers) t 5 105 3 741 769 BCI * Pure raw materials > 35% In 2017, we joined BCI (Better Cotton Initiative), Data refers to Benetton Group S.r.l., Benetton India Private Ltd. and Benetton Korea Inc. the world’s largest project dedicated to cotton sustainability. According to the prescriptions of the Bio-based fibers Wool updated on the latest news in the industry, we will program, in 2018 we started procurement processes In summer 2018, United Colors of Benetton launched Benetton Group’s core business is knitwear promote a dialogue with the other players, share costs for cotton cultivated and collected by farmers trained Bio Beachwear, a new line of women’s swimwear made and outstanding quality wool is a must. In 2018, and decisions, reduce risks, maximize resources and to minimize the use of fertilizers and pesticides, using from a bio-based yarn. we implemented and confirmed a series of initiatives influence the choices that shape the future of the wool water and the soil in a sustainable way and complying The Bio Beachwear line ensures the performance of to obtain certification of the quality of our wool, market at the global level. with the principles of equity in labor relationships. nylon – a man-made polymer used for the production a fiber that can be regenerated, and to consolidate In 2018, our BCI cotton share exceeded 23% of most of the swimsuits sold in the market – but A green company | A green our position as global stakeholder for all the decisions (calculated on the annual total cotton requirement), uses a next generation hi-tech yarn, obtained from company | A green 86 87 that involve the queen of all of the fibers we use. a very promising indication which we intend to further castor seeds that grow in arid areas that are not improve in the next years. intended for agriculture. The yarn has no effect on Woolmark the human or animal food chain. Moreover, less water 94% of the wool garments (monofiber) produced by Certified down is used for its processing and approximately 25% of In April 2019, a day of the the Benetton Group are made of 100% pure wool, In May 2017, United Colors of Benetton was certified CO2 emissions are saved compared to polyamide. The with no regenerated fibers or other fibers added. In annual congress of the according to the Responsible Down Standard (RDS), patent is owned by Fulgar, an international leader in the 2017, we obtained the Woolmark certification, a global International Wool Textile a certification that guarantees that the feathers and yarn production market. authority for wool. Its brand on our products provides Organization will take place down used in the Benetton and Sisley collections assurance to consumers on the fact that our products at the Benetton Studios come from geese and ducks reared for alimentary in Castrette. The theme have been rigorously tested and stand out for their purposes and in accordance with the principles and In the Undercolors 2020 absolute quality. of this edition is “Wool in criteria of animal wellbeing. excellence”: sustainability, Spring Summer menswear traceability, as well as animal collection we will exclusively IWTO RDS verifies – independently, through the evaluation use organic cotton. In 2017, we were the first fashion company in Europe health and welfare, will be of neutral and specialist bodies – all aspects that refer to join the IWTO, the International Wool Textile discussed. to animal farming and care, including down feather Organization. As members, we will be constantly traceability from its origin to the final product.

The objective is to reassure consumers on the fact Our objective is to reach 100% that their purchase contributes to improving the living of sustainable cotton used in our conditions of the geese and ducks involved in the collections by 2025. production process. 88 | A green company CO and pollutants of chemical use the consumption, energy obtained ratings of the evaluation the in threshold value minimum any to setting avoid year, decided first has the for least at Benetton, to taken. be actions possible and weaknesses to identify companies allow that benchmarks FEM provides Higg logic, fail” or “pass traditional the Overcoming end. year at to assessment process subject transparency and improvement ongoing an in engaged is supplier the but audits, follow-up or visits monitoring no are There by SAC. approved entity party a third by verified be also can It self-assessment. a supplier as organized is and principle application-oriented an on based questions 80 about FEM includes Higg The of chemicals. use the and atmosphere the into emissions the energy, and of water use the systems, management of environmental adoption the monitors Module), which Environmental Facility the (i.e., FEM module the using 70%(approximately by volume) of wet processes percentage asignificant we evaluated Index, Higg the to Thanks performances. sustainability their to measure retailers and brands enable that of tools aseries i.e. Index, from 2018 Higg to the use starting we began members, SAC As brands. textile and footwear fashion, including production, sustainable promoting alliance largest the 2017,In Coalition), Apparel (Sustainable SAC we joined SAC Index Higg and suppliers. the and brands the between dialogue the facilitated protocol the practice, best industry’s the as Recognized member. afounding is Group Benetton of which group working Chemical) of Hazardous Discharge (Zero ZDHC by the developed and a protocol shared Guidelines”, Water Waste “ZDHC of the adoption the 2013 in by started Group were supported Benetton that 2018,In programs testing wet process water the WastewaterZDHC Guidelines processes. production its from chemicals harmful most the to eliminate efforts 2018, toIn concentrate continued Group Benetton pollutantsof chemical Reduction in the use – chain Group’s supply to the entire extended is change climate against fight to the Group’s contribution Benetton of environmental impact Management

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89 | Focus In 2019, the French company In 2019, we will convert part TK Blue will implement for of the air transport in rail Benetton Group a new procedure transport for the orders of goods for calculating the annual with destination Mongolia environmental impact of inbound and the eastern regions of Russia. and outbound transport, which will not be limited to the Headquarters and stores redistribution of workspaces and plant management calculation of emissions, but will Since 2015, Benetton Group has carried out energy and revamping, also in 2018 the Benetton Group was reduced emissions compared to cargo flight transport analyze it by mode of transport diagnosis tests on a representative sample of stores again successful in optimizing and reducing energy – and then continue with air transport for the final and geographical area of and in the headquarters of Ponzano and Castrette. consumption in its headquarters. Similar efforts were portion of the journey. Finally, since 2018, dedicated destination, thus allowing concrete These valuations provided a snapshot of the energy made to improve energy efficiency in the stores orders have been produced for clothing destined for actions to be taken, targeting consumption structure of the areas analyzed, enabling with the installation of highly efficient air conditioning Mexico, one of our main foreign markets, to anticipate the reduction of environmental the Company to identify the major criticalities and systems, the use of LED lamps and the installation delivery in Castrette and convert a percentage of air impact in relation to transport. consequently define and develop a structured energy of self-reading energy meters.

transport into a fast maritime service, with 97% CO2 efficiency plan. Thanks to a project including the emissions expected to be saved. Saturation of transportation GRI 302-1 Energy consumption Unit 2016 2017 2018 Methane Thanks to the elimination of pallets, we have optimized Energy consumption in the headquarters kWh 18 196 465 18 124 756 18 690 493 In 2018, we consolidated the use of methane-fueled packaging storage on our vehicles, eliminating one truck GJ 65 507 65 249 67 286 vehicles in inbound flow of merchandise from the in five for the transportation of our merchandise in Energy consumption in the stores kWh 30 096 006 36 146 392 38 855 632 ports of Genoa/La Spezia/Trieste/Venice to Castrette, Italy and Europe. GJ 129 946 130 127 139 880 reaching 10% of the total volume. Transport on This and other measures enabled us to reduce CO Total energy consumption kWh 48 292 471 54 271 148 57 546 125 2 GJ 195 453 195 376 207 166 methane-fueled vehicles resulted in 10-15% CO emissions linked to the transportation of merchandise 2 Total gas* m3 1 122 963 1 331 664 1 210 994 emissions saved compared to the use of diesel-fueled on the road by 25%, resulting in 511 tons of CO2 saved GJ 39 326 46 787 42 691 vehicles. every year. Diesel oil** l 54 104 57 351 441 914 GJ 1 945 2 062 15 856 Reverse logistics Packaging Gasoline** l 91 002 114 097 168 369 All the unsold items are collected in a single warehouse, Thanks to the use of reusable metal baskets, Benetton GJ 2 978 3 733 5 514 in Biancade, Treviso, and from there routed to outlets Group saves over 1 300 tons of cardboard every year, District heating kWh 131 929 131 000 121 825 and wholesalers. corresponding to approximately 20 000 trees. GJ 475 472 439 Total energy consumption GJ 240 177 248 430 271 666 A green company | A green A green company | A green 91 90 * The breakdown of natural gas consumption between headquarters and stores is not available. CO2 emissions reductions Unit 2016 2017 2018 Logistics t CO 20 821 25 744 24 580 Data relative to the consumption of natural gas in 2016 include only a certain number of stores in Italy. 2 ** 2016-2017 the consumption is limited to heating. 2018 the consumption includes also vehicle fleet. Intensity index g Co2/item x km 0.068 0.087 0.027

FSC certified paper water-based inks. FSC is the global trademark that Data Center Today, catalogues, brochures and other paper-based identifies products deriving from controlled forests Work began in 2012 and continued through 2018 to Renewable energy communication materials used by the Benetton Group managed according to social and environmental improve the efficiency of the Ponzano Data Center, Since 2017, the energy feeding the entire Benetton are developed in FSC (Forest Stewardship Council) sustainability criteria. absorbing about 7% of the total energy of the campus. campus and 65% of the stores in Italy is generated paper, also used for the store shoppers, treated with These interventions mainly concerned the power supply by certified renewable sources (water and ocean). and air conditioning system of the Data Center and GRI 301-1 Packaging Unit 2016 2017 2018 resulted in a reduced consumption of approximately Non-commercial investments Total t 5 911 5 553 5 010 750 000 kWh/year. Over one-half of the non-commercial investments Renewable Further projects targeted to the improvement of made in 2018 targeted plant safety improvement. Paper and cardboard t 4 825 4 563 4 127 the Data Center power supply efficiency (UPS) are Moreover, we continued the replacement of the lighting Non-renewable scheduled for 2019, with a projected reduction to be with energy efficient, long lasting LED bulbs in some of Polyethylene (PE) t 1 084 989 881 achieved by December of about 50 000 kWh/year and the areas of the factories of Ponzano and Castrette. Iron t 2 1 2 2020-year projections of about 120 000 kWh. Data refers to Benetton Group S.r.l., Benetton India Private Ltd. and Benetton Korea Inc. GRI 305-1 / 305-2 Emissions Unit 2016 2017 2018 Scope 1 Emissions (GRI 305-1) The relamping activity and the In 2019, we will launch an internal Consumption of natural gas in the headquarters t CO2 2 195 2 615 2 388 and in the directly operated stores* consequent increase in efficiency communication campaign aimed will be continued in a massive at stimulating more sustainable Diesel oil t CO2 143 152 1 167

Gasoline t CO2 218 274 404 manner also in 2019 according behavior among our employees

Total t CO2 2 557 3 040 3 959 to the relevant investment plan. during their daily life in the Scope 2 Emissions (GRI 305-1) – Location Based Company. The campaign will District heating t CO2 74 77 23 encourage water, electricity, paper Energy consumption in the headquarters t CO2 6 503 6 479 6 158 and ink savings and is the first Energy consumption in the directly operated stores t CO2 10 959 11 350 14 326 In 2019, we will launch the of a series of initiatives aimed at Total t CO2 17 462 17 829 20 507 making our factories in Castrette, Scope 2 Emissions (GRI 305-1) – Market Based “B-Green” project, a new sustainability-based store format Ponzano and Fabrica more District heating t CO2 74 77 23 efficient and sustainable. Energy consumption in the headquarters** t CO2 8 507 426 1 472 characterized by the use of digital

Energy consumption in the directly operated stores t CO2 17 513 12 340 14 106 mannequins and decorative

Total t CO2 26 020 12 766 15 601 materials derived from production residues and waste of the textile * The breakdown of CO2 linked to the consumption of natural gas between headquarters and stores is not available.

** The reduction of CO2 emissions in 2017 is due to the purchasing of green energy. In 2018 the consumptions of Benetton India Pvt. Ltd. industry, along with increased and Benetton Korea Inc. – not reported in 2016-2017 – are also included. energy efficiency through an automated management of all plants through the analysis of Big Data and artificial intelligence. Store effort integrates recent activities targeted to energy In 2018, we presented “London”, a new store concept, efficiency and implemented in the On Canvas store also replicated in Turin and Padua, where we have concept, which features LED lamps, high efficiency air used furniture in natural materials and environmentally conditioning systems, FSC (Forest Stewardship Council) A green company | A green A green company | A green sustainable linings, limiting the use of plasterboard. This certified wood furniture and Leed certified ceramic. Waste management regard to waste management and its ethical and 92 93 Benetton Group operates in compliance with the environmental consequences. Europe average API industry’s regulations and behaves responsibly with The API (Area Performance Index) index measures API 2016 0.0712 annual energy consumption rates of a store in relation Total waste production 2016 2017 2018 to its sale surface and the total of opening hours in API 2017 0.0680 one year. The index is used by the Group to monitor Unit Total % Total % Total % and compare energy consumption rates of the directly Total t 1 956 100 1 754 100 2 202 100 API 2018 0.0563 managed stores. of which: Recurring waste t 1 781 91 1 679 96 2 152 98 of which segregated t 1 593 81 1 492 85 1 916 87 In 2018, energy consumption monitoring in the the replacement of traditional light bulbs with LED ones of which non segregated t 188 10 187 11 236 11 stores improved, enabling the Group to collect more and the implementation of specific metering devices Occasional waste t 175 9 75 4 50 2 representative data regarding store performance in for the main consumption centers. The Group’s future Europe. objective is the development of a system that collects, Waste production (t) In 2018, the API index, already down in the previous analyzes and quantifies store data with a view to further period, reduced further (-17%) thanks to store improving the monitoring and implementation of an 81% 10% 9% 2016 1 956 refurbishment and restyling, the continued installation automated management system that optimizes energy 85% 11% 4% of innovative high-efficiency air conditioning systems, consumption. 2017 1 754 87% 11% 2% 2018 2 202

Segregated Non segregated Occasional Recurring

0,07761

API 2017 0,06547 Towards a circular economy

In 2018, Benetton Group continued and launched a series of initiatives intended to improve the circular supply chain, from design to production to consumption and product end-cycle.

The aim is to develop a medium-term strategy of circular economy, designed to improve the sustainability of our production processes, by gradually limiting the quantity of inbound materials and energy, while concurrently B-Care reducing waste and outbound losses. In a society hinged on disposable fashion, Benetton Rationalization of collections Experimental treatments Group is committed to producing garments that last During the year, we have reduced the volume of In the year, we have experimented alternative over time. However, their duration also depends on how production and increased the quality of our garments treatments for our collections, with the objective of consumers treat them. That is why in 2018 we published and materials. This strategic decision – which has a clear reducing waste of resources and the use of chemicals B-Care, an online garment maintenance guide for our impact on the Benetton Group’s carbon footprint – is harmful to the environment. consumers. a response to the need to make consumers buy fewer Under the slogan “Wear. Care. Repair”, the guide garments, which will last for a longer time. Mineral-based dyes includes a series of video tutorials and written instructions that explain how to simply take In 2018, we continued the project regarding the care of one’s garments at home in order to make them last longer. B Long garment-dyed process using mineral-based dyes on an B Long is a comprehensive strategic project designed organic cotton men’s t-shirt line. This project follows In addition, the guide also explains how to read garment labels and how to wash garments to ensure the quality and duration of our garments the experimentations of the past years in the field of by hand and in the washing machine in order to prevent color fading or product shrinking; through the selection of raw materials, a series of more sustainable, mineral-based dyes. how to remove pilling, i.e. the small balls of fiber that form on the weave, as a result of functional and mechanical tests designed to assess use; how to mend garments, sew buttons, patch a cotton jersey or repair an item by using the technical-quality characteristics, an in-depth Denim needle and thread. analysis of consumers’ real needs and communication In the year, we developed a laser-treated “denim color” campaigns to provide our customers with detailed for men’s and women’s denim items. These actions, if carried out frequently and with care, considerably increase the life cycle instructions on garment care and repair. of a garment, thus helping to reduce the carbon footprint of the fashion industry. | Focus A green company | A green 94 Wasatex Project 95 Developed in 2014-2016 thanks to EU funding, the Over the next few years, we Wasatex project allowed the textile factory of the will be working on a series Olimpias Tekstil Group in Osijek, Croatia, to reuse of garments featuring strong purified wastewater in its industrial production cycle. sustainability and recyclability The aim of the project is to recycle up to 90% of characteristics, i.e. combining the process water when the plant is fully operational. characteristics such as Olimpias Tekstil is a long-standing partner of Benetton monofiber, organic cotton, Group. natural fibers, cellulose-based labels, mineral-based dyes and laser and ozone-based treatments. A numbers company

In 2018 a new wave of optimism swept over the clothing market, despite the uncertainties and the still unresolved challenges: the volatility of the macroeconomic context, the instability of some emerging markets, the drive towards digitalization, new consumer purchasing habits and the need to revise traditional retail mechanisms made a total recovery of the industry difficult, but still a few stimulating innovation opportunities were offered.

For Benetton Group, the year just ended was a period of transition, during which action was taken on the product, by enhancing innovation and improving the attractiveness of the collections; on communication, by investing in storytelling and on the integration between online and offline stores to offer customers a new, informal and digital shopping experience. Despite innovation and investments, the recovery of the Group’s profitability is still uncertain: sales in the intermediate seasons were affected by adverse weather conditions and the worsening of the geopolitical situation in some countries, and especially in the Middle East, constituted a further element of difficulty.

For Benetton Group, 2018 represents the beginning of a new course, thanks to its rediscovered identity of quality and color, which we expect to be seen translated into an improvement in overall profitability, thanks to sales uptrend, improved margins and cost containment measures. Financial capital A numbers company | A numbers company A numbers company | A numbers company 98 99 Production capital Vendite nette per marchio (milioni di euro)

Sisley 143 (12%)

Financial UCB 1 080 (88%) capital 2018 net sales by brand 2018 net sales by geographical area In 2018, product transformation and evolution, distribution and brand repositioning had a negative impact on the Vendite nette per marchio (million Euro) (millionVendite Euro) nette per area geografica Group’s economic results. (milioni di euro) (milioni di euro)

GRI 201-1 Value generated and distributed by Benetton (thousand Euro) Rest of the world 306 (25%) 2016 2017 2018 Sisley Economic value generated 1 489 759 1 341 314 1 304 758 143 (12%) Italy Economic value distributed 1 461 274 1 397 451 1 334 651 418 (34%) Operating costs 1 187 930 1 126 330 1 082 198 Value distributed to employees 224 017 232 263 223 820 Value distributed to investors 12 807 15 720 13 918 Value distributed to P.A. 33 548 20 751 13 223 UCB 1 080 (88%) Value distributed to the community 2 970 2 384 1 493 Total retained economic value 28 485 (56 137) (29 893)

Rest of Europe The economic value generated by Benetton amounts on improving product quality and increasing margins; 506 (41%) Vendite nette per area geografica to Euro 1 304 million, the economic value distributed • fewer promotions along with expected short-term (milioni di euro) totals Euro 1 334 million and the economic value sales reduction, but with the commitment to increase retained is negative for about Euro 29 million. brand attractiveness in the long term. Rest of the world 306 (25%) The reduction in the economic value generated is

attributable to a reduction in sales by the directly Despite the overall decreased economic value Italy operated stores, which were affected by the general generated, the Group maintained the commitments to 418 (34%) context of weakness, with similar declines also in its stakeholders: the largest portion of the economic comparable stores. The reduced economic value value distributed (around 81%) is allocated to supplier of sales distributed is essentially due to: remuneration, in particular to the management of 66% A numbers company | A numbers company A numbers company | A numbers company • targeted control of operating costs, receivables and operating services and the purchase of raw materials. 100 inventories in order to limit operating loss, consistently 17% is allocated to employee remuneration, including overseas 101 with the provisions of the Three-Year Plan; all that is provided for in the relevant contract as well as • progressive rationalization of the collections, focused the welfare system guaranteed to employees. Rest of Europe 506 (41%) Economic value generated and distribuited (thousand Euro) (thousand Euro) 2016 1 489 759 1 334 651

2017 1 341 314 economic value 2018 1 304 758 distributed

Economic value generated Total economic value retained Economic value distributed: Operating costs To employees To capital providers To Public Administration To the community Production capital

GRI 204-1 Value of procured products (Euro) ReteBenetton distributiva Group dell’azienda distribution network in 2018 In a broader perspective, production capital also (numero di negozi) 2016 2017 2018 (no. of stores) includes the Group’s distribution network, currently EMEA 353 312 938 51.0% 287 045 960 46.6% 265 281 050 45.6% involved in a complex process of development, Asia 336 053 624 48.5% 324 998 313 52.8% 313 659 457 54.0% UCB rationalization and significant restyling. The main Rest of the world 3 345 159 0.5% 3 418 931 0.6% 2 187 476 0.4% 4 034 (86%) investments in the period targeted the provision Total 692 711 720 615 463 204 581 127 983 of support to the direct sales network and the refurbishment of existing stores as well as the Most of the suppliers used by Benetton Group for the countries. The greater proximity of suppliers to the development of the omnichannel project. Sisley production of clothing, footwear and accessories (54%) Group’s headquarters, where the main operational In the near future, after the consolidation of the 684 (14%) are currently located in Asia, particularly in China, India activities are concentrated, allows faster response to objective of balancing directly operated stores and and Bangladesh. Confirming the new course started creative needs, increased control of the supply chain franchisees, Benetton Group intends to continue the last year, the Group is re-evaluating its procurement and improved efficiency of logistics. restyling of the stores, the roll-out of the omnichannel strategy by choosing suppliers located in the EMEA* project on the entire distribution network in Italy and the growth of e-commerce.

* The reference excludes the collections of Korea, India and Japan, Italy which are produced by local suppliers. FOS + IOS DOS 1 289 132 2017 1 421 2018 1 256 FOS + IOS DOS 1 142 114 A numbers company | A numbers company A numbers company | A numbers company 102 103

Rest of Europe FOS + IOS DOS 1 16 4 360 2017 1 524 2018 1 350 FOS + IOS DOS 988 362

Rest of the world FOS + IOS DOS 1 468 700 2017 2 168 2018 2 112 FOS + IOS DOS 1 383 729 Appendix

106 | Appendix - Methodological notes clothing Communities Methodological year.previous the in launched activities engagement stakeholder of 2018, anumber In confirmed Group Benetton stakeholders Group Benetton • • of: basis the on prioritized were subsequently functions, Company main the with workshops and interviews dedicated through which, were identified, of stakeholders categories 30 relevant to identify allowed exercise This •  • into: them dividing stakeholders, its mapped has Group Benetton account, into activity of Company areas the Taking stakeholdersOur Core Option. the with (GRI), accordance in Initiative Reporting Global 2016 in defined Standards” by the Reporting Sustainability “GRI the with accordance in prepared also was report The Report. Integrated of the for drafting account into the were taken (IIRC) Council Reporting Integrated 2013 December in issued International Framework” by the “International of the content and principles The indicators. performance sustainability business’s primary the and factors, non-financial and financial between connections the through over time created is value how illustrates Report Group’s Integrated Benetton

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and

107 | Appendix - Methodological notes Consumer experience Perimeter by aspect Disclosure limitations on perimeter by aspect and product quality High GRI standard material aspects Internal External Internal External Economic performance Group - - - Respect of human rights of workers Procurement practices Group - - - Materials Group Suppliers - Disclosure partially extended to suppliers Product safety Effluents and waste Suppliers - Disclosure partially extended to suppliers Environmental compliance Health and safety in the workplace Emissions Group Suppliers; Logistics; Disclosure partially Disclosure not extended Indirect points of sale extended to directly to the indirect points of (IOS/FOS) operated stores and sale and suppliers; partially Responsible raw material Responsible supply procurement chain management Polluting chemicals Italian offices extended to logistics Management and development of human Environmental compliance Group - - - Innovation resources Relations with Supplier environmental assessment Group - - - local communities Employment Group - - - Diversity and equal Labor/management relations Group - - - opportunity Occupational Health and Safety Group Suppliers - Disclosure not extended Climate change to suppliers and energy efficiency

Relevance for stakeholdersRelevance for Training and education Group Indirect points of sale - Disclosure partially Brand protection (IOS/FOS) extended to indirect Leadership continuity and Company’s points of sale governance stability Diversity and equal opportunity Group Suppliers - - Fight against Responsible and transparent corruption communication Non-discrimination Group Suppliers - - Water consumption Consolidation Freedom of association Group Suppliers - Disclosure not extended of the business model and collective bargaining to suppliers Digital transformation and profitability Appendix - Methodological notes | Appendix - Methodological Packaging Circular economy Child labor Group Suppliers - - notes | Appendix - Methodological

108 Multi-channel strategy and focus 109 Consumer privacy on strategic markets Forced or compulsory labor Group Suppliers - -

Low Human rights assessment Group Suppliers - - Local communities Group Suppliers - Disclosure not extended to suppliers Low Relevance for Benetton High Supplier social assessment Group - - - Customer health and safety Group - - - Marketing and product labelling Group - - - Socioeconomic compliance Group - - - The material topics were then cross-checked against As for the material aspects outside of Benetton the aspects defined by the GRI Standards, as set out Group, but currently not reported, the Company will in the following table. The table also indicates the focus its attention in coming years on implementing perimeter of each aspect and any possible limitation specific activities designed to gradually extend the involving failure to extend reporting to the perimeter scope of disclosure. outside the organization. 110 | Appendix - Methodological notes Company’s of the picture clear and abalanced providing of aim the with gathered was reported information The quality report forPrinciples ensuring (Treviso).Villorba di 1, Castrette in Cartiera della via in located is complex Veneto industrial Ponzano (Treviso), in its Minelli, while Villa via in headquarters its has S.r.l. Group Benetton comparability. data full ensure not does process which collection data the in change to a due France en Succursale S.r.l. Group Benetton Z.O.O., and Sp. Poland Retail CO. Benetton Ltd. Japan Benetton Portugal, em -Sucursal S.r.l. Group Benetton A.S., Sanayi Giyim Benetton o.o.o., Estate Real C.V., de Kazan S.A. Mexicana Benetton o.o.o., Russia Benetton GmbH, Ben New España, en Sucursal Retail Benetton Ltd, Pacific Asia Benetton Korea Inc., Benetton Ltd, Pvt India Benetton S.r.l., Servizi Benetton S.r.l., Children Ponzano S.p.A., Fabrica S.r.l., Network for 2016 the which Italia to Retail were limited period 108-1, GRI indicators: 102-41, 401-1, 404-1, 403-1, following to the relative for data except some above, the with coincides perimeter reporting The abroad. and Italy in subsidiaries its and S.r.l. Group refers to Benetton reported information The basis. annual an on reported and gathered are indicators Performance from 2016 to 2018, available. if years three the 2018 during trends performance and year calendar during out carried activities and initiatives of adescription contains and Report Integrated Group’s of Benetton edition third the is document This context sustainability and perimeter Reporting day lost For the contracts. temporary on staff other and interns exclude and only employees permanent for calculated been have years three for all rates The 000 x1000 • x1000 worked to injury/hours due lost days of working number rate: day • Lost below: provided are rates for used injury of calculation methods of the Details Injury rates year. the during leave parental took who of employees number to the compared leave from maternity/paternity returning 12 employed of workers after number months the as calculated is leave parental after rate retention The leave parental after Retention Report. of this drafting of the time the at available information the with estimate referred to 2018 data The below. possible best the are provided are document this in reported indicators certain to calculate used methods of the Details methods Calculation performance. of Benetton’s trends in interested stakeholders to all view acomplete and information of the interpretation accurate an to provide order in possible, where time, over comparability data to ensure as so structured and tool of asoftware implementation the through improved was data quantitative and information the process of reporting The characteristics. and actions worked of injuries/hours number rate: Injury 2017-2016 regarding emissions indirect calculate 2018. in to used emissions factors the Conversely, indirect of the for calculation used the statistics, 2016 Enerdata on version) recent (the based most for available comparisons international the regarding by Terna were used published tables the in reported factors emission the emissions location-based of the calculation For the approach. market-based and location-based to the according calculated are of electricity consumption the with connected emissions the heating; district and to energy relate emissions indirect emissions: 2indirect Scope 2018. for 2016, for Environment the Ministry 2017Italian and by the published parameters standard of national table the in reported factor emission the using determined were vehicles for company oil the diesel and gasoline and stores direct global and offices head of the heating for oil the diesel and gas of natural consumption total to the related emissions the emissions: 1direct Scope way: following the in were determined CO the calculate (CO dioxide carbon was considered gas only the particular, In standard. 14064-1 ISO the in indicated international principles the using were calculated emissions gas Greenhouse emissions gas Greenhouse injuries. commuting for lost days the include and part) in worked was latter (unless occurred the incident the day from the days calendar as were calculated by injury days lost the rate, 2 Report the in disclosed emissions 2 to used factors emission ). The

used. was transport, in specialized agency non-financial international an Blue, by TK developed a methodology of CO for emissions: calculation 3indirect Scope the period. for 2016-2017-2018 the available tables three-year Defra the in reported factors emission the using were calculated heating to district linked emissions 2016-2017, years the The available. where were used, for available and by ABI published document, Mixes” Residual “European the in reported mixes residual the emissions, of market-based cycle). calculation For the (2017 made was reporting calculation the which in time the at version (2015), updated most the was it as from Terna table derive previous consumption energy 2

transport, logistics with connected emissions

111 | Appendix - Methodological notes GRI content index

GRI Disclosure Page number Omission GRI Disclosure Page number Omission Standard Standard

GRI 102: GENERAL DISCLOSURES 2018 102-47 List of material topics 106-109 102-48 Restatement of information 110-111 Organizational profile 102-49 Changes in reporting 106-111 102-1 Name of the organization 110 102-50 Reporting period to which the social responsibility report refers 110-111 102-2 Primary brands, products, and/or services 15; 39-47 102-51 Date of most recent previous social responsibility report 110 102-3 Location of the organization’s headquarters 110 102-52 Reporting cycle 110 102-4 Countries in which the organization operates 15; 26-27 102-53 Contact point for questions regarding the social responsibility report 124 102-5 Nature of ownership and legal form 26-27; 110 and its contents 102-6 Markets served 54; 102-103 102-54 Claims of reporting in accordance with the GRI Standards 106 102-7 Scale of the organization 10-11; 64; 100-103 102-55 GRI content index 112-119 102-8 Information on employees and other workers 64-66 102-56 Policy and current practice with regard to seeking external assurance 121-123 102-9 Description of the supply chain (number of suppliers, volumes and sourcing 75-78; 88-90 for the social responsibility report markets) 102-10 Significant changes during the reporting period regarding the organization’s 20-21 size, structure, ownership, or its supply chain 102-11 Explanation of how the precautionary approach or principle is addressed The Company by the organization adopts a prudential approach in managing environmental, social and governance risks as illustrated on page 36-37 102-12 External initiatives 32-33; 75-79; 88-89 102-13 Memberships of national and/or international advocacy organizations 73 Appendix - GRI content index | Appendix - GRI content Appendix - GRI content index | Appendix - GRI content Strategy

112 102-14 Statement from the most senior decision-maker of the organization about 7 113 the relevance of sustainability to the organization and the organization’s strategy for addressing sustainability Ethics and integrity 102-16 Mission, values, codes of conduct, principles relevant to economic, 18-19; 30-31; 34-35; environmental and social performance, developed internally and state 75-78; 88-90 of progress in their implementation Governance 102-18 Governance structure of the organization, including committees of the 22-25 highest governance body. Committees responsible for decision-making on economic, environmental and social impacts Stakeholder engagement 102-40 List of stakeholder groups with which the organization engages 106-107 102-41 Percentage of total employees covered by collective bargaining agreements 72 102-42 Basis for identification and selection of primary stakeholders with whom to 106-107 engage 102-43 Approach to stakeholder engagement 106-107 102-44 Key topics and concerns that have been raised through stakeholder 106-108 engagement, and how the organization has responded to those key topics and concerns, including through its reporting Reporting practice 102-45 Entities included in the consolidated financial statements 110 102-46 Defining Report content and topic boundaries 106-109 GRI Disclosure Page number Omission GRI Disclosure Page number Omission Standard Standard

MATERIAL TOPICS Effluents and waste GRI 103: Management Approach 2016 ECONOMIC PERFORMANCE INDICATORS 103-1 Explanation of the material topic and its boundary 106-109 103-2 The management approach and its components 36-37; 88-92 Economic performance 103-3 Evaluation of the management approach 88-92 GRI 103: Management Approach 2016 GRI 306 Effluents and Waste 2016 103-1 Explanation of the material topic and its boundary 106-109 306-1 Quantity of water discharged by volume and quality 88; 94 103-2 The management approach and its components 29-31; 36-37 Environmental compliance 103-3 Evaluation of the management approach 29-31 GRI 103: Management Approach 2016 GRI 201: Economic performance 2016 103-1 Explanation of the material topic and its boundary 106-109 201-1 Direct economic value generated and distributed 100-103 103-2 The management approach and its components 36-37; 88-93 Procurement practices 103-3 Evaluation of the management approacht 88-93 GRI 103: Management Approach 2016 GRI 307: Environmental compliance 2016 103-1 Explanation of the material topic and its boundary 106-109 307-1 Non-compliance with laws and regulations in the environmental area In 2018 the Group 103-2 The management approach and its components 36-37; 75; 102 has not received significant 103-3 Evaluation of the management approach 75; 102 fees for non-compliance GRI 204: Procurement practices 2016 with laws and regulations concerning the 204-1 Proportion of spending on local suppliers at significant locations 102 environmental issue of operation Supplier environmental assessment GRI 103: Management Approach 2016 ENVIRONMENTAL PERFORMANCE INDICATORS 103-1 Explanation of the material topic and its boundary 106-109 103-2 The management approach and its components 36-37; 88-89 Raw materials GRI 103: Management Approach 2016 103-3 Evaluation of the management approach 88-89 Appendix - GRI content index | Appendix - GRI content Appendix - GRI content index | Appendix - GRI content 103-1 Explanation of the material topic and its boundary 106-109 GRI 308: Supplier environmental assessment 2016 308-2 Negative environmental impacts in the supply chain and actions taken 88-89 Some information 114 103-2 The management approach and its components 36-37; 86-87 115 103-3 Evaluation of the management approach 86-87 regarding this indicator is not currently GRI 301: Raw materials 2016 available. Benetton 301-1 Materials used by weight or volume 86-87 undertakes, Emissions in the coming years, GRI 103: Management Approach 2016 to gather the data 103-1 Explanation of the material topic and its boundary 106-109 needed to disclose 103-2 The management approach and its components 36-37; 90-92 this indicator 103-3 Evaluation of the management approach 90-92 GRI 305: Emissions 2016 SOCIAL PERFORMANCE INDICATORS 305-1 Direct greenhouse gas emissions (Scope 1) 92 Some information regarding this indicator Employment is not currently GRI 103: Management Approach 2016 available. Benetton 103-1 Explanation of the material topic and its boundary 106-109 undertakes, 103-2 The management approach and its components 36-37; 65-72 in the coming years, 103-3 Evaluation of the management approach 65-72 to gather the data needed to disclose GRI 401: Employment 2016 this indicator 401-2 Benefits provided to full-time employees that are not provided 65-72 305-2 Energy indirect greenhouse gas emissions (Scope 2) 92 to temporary or part-time employees, by significant locations of operation 305-3 Other indirect greenhouse gas emissions (Scope 3) 90 401-3 Return to work and retention rates after parental leave (by gender) 67 305-4 GHG emissions intensity 90 GRI Disclosure Page number Omission GRI Disclosure Page number Omission Standard Standard

Labor/management relations GRI 406: Non-discrimination 2016 GRI 103: Management Approach 2016 406-1 Number of incidents of discrimination and corrective actions taken 76-77 103-1 Explanation of the material topic and its boundary 106-109 Freedom of association 103-2 The management approach and its components 36-37; 72-73 GRI 103: Management Approach 2016 103-3 Evaluation of the management approach 72-73 103-1 Explanation of the material topic and its boundary 106-109 GRI 402: Labor/Management Relations 2016 103-2 The management approach and its components 75-79 402-1 Minimum notice periods regarding organizational changes 73 103-3 Evaluation of the management approach 75-79 Occupational health and safety GRI 407: Freedom of association 2016 GRI 103: Management Approach 2016 407-1 Identification of operations and main suppliers in which the right to The information 103-1 Explanation of the material topic and its boundary 106-109 exercise freedom of association and collective bargaining may be at regarding this indicator 103-2 The management approach and its components 36-37; 73 significant risk and measures taken to support these rights is not currently available. 103-3 Evaluation of the management approach 73 Benetton undertakes, in the coming years, GRI 403: Occupational Health and Safety 2016 to gather the data GRI 403-2 Rates of injury, occupational diseases, lost days, absenteeism 73 Some information needed to disclose and total number of work-related fatalities, by region and by gender regarding this indicator this indicator is not currently Child labor available. Benetton undertakes, GRI 103: Management Approach 2016 in the coming years, 103-1 Explanation of the material topic and its boundary 106-109 to gather the data 103-2 The management approach and its components 36-37; 75-79 needed to disclose 103-3 Evaluation of the management approach 75-79 this indicator GRI 408: Child labor 2016 Training and education 408-1 Identification of operations and main suppliers having significant risk 76-77 GRI 103: Management Approach 2016 for incidents of child labor, and measures taken to contribute to its 103-1 Explanation of the material topic and its boundary 106-109 elimination Appendix - GRI content index | Appendix - GRI content 103-2 The management approach and its components 36-37; 68-70 Forced or compulsory labor index | Appendix - GRI content

116 103-3 Evaluation of the management approach 68-70 GRI 103: Management Approach 2016 117 GRI 404: Training and Education 2016 103-1 Explanation of the material topic and its boundary 106-109 404-1 Average hours of training per year per employee, by gender 70 103-2 The management approach and its components 36-37; 75-79 and by employee category 103-3 Evaluation of the management approach 75-79 404-2 Programs for upgrading employee skills and transition assistance 68-70 GRI 409: Forced or compulsory labor 2016 programs 409-1 Operations having significant risk for incidents of forced or compulsory 76-77 Diversity and equal opportunity labor, and measures taken to contribute to its elimination GRI 103: Management Approach 2016 Human rights assessment 103-1 Explanation of the material topic and its boundary 106-109 GRI 103: Management Approach 2016 103-2 The management approach and its components 22-25; 36-37; 103-1 Explanation of the material topic and its boundary 106-109 64-67; 79-80 103-2 The management approach and its components 36-37; 75-79 103-3 Evaluation of the management approach 22-25; 64-67; 79-80 103-3 Evaluation of the management approach 75-79 GRI 405: Diversity and Equal Opportunity 2016 GRI 412: Human rights assessment 2016 405-1 Composition of governance bodies and breakdown of employees 22-25; 66 412-1 Total number and percentage of suppliers subject to human rights 76-77 according to gender, age group, minority group membership, and reviews or impact assessment other indicators of diversity Local communities 405-2 Ratio of basic salary and remuneration of women to men 72 Limitated to Italy GRI 103: Management Approach 2016 Non-discrimination 103-1 Explanation of the material topic and its boundary 106-109 GRI 103: Management Approach 2016 103-2 The management approach and its components 36-37; 75-79 103-1 Explanation of the material topic and its boundary 106-109 103-3 Evaluation of the management approach 75-79 103-2 The management approach and its components 36-37; 64-67; GRI 413: Local communities 2016 76-77; 79 413-1 Percentage of sites of operations in which local community 76-77; 78 103-3 Evaluation of the management approach 64-67; 76-77; 79 engagement, impact assessments, and development programs have been implemented 118 | Appendix - GRI content index 417-2 417-1 GRI 417: Marketing andlabeling2016 103-3 103-2 103-1 GRI 103: Management Approach 2016 labeling and Marketing 416-2 416-1 GRI 416: Customer healthandsafety 2016 103-3 103-2 103-1 GRI 103: Management Approach 2016 safety and health Customer 414-2 414-1 GRI 414: Supplierassessment for onsociety impacts 2016 103-3 103-2 103-1 GRI 103: Management Approach 2016 society on for impacts assessment Supplier Standard GRI ofoutcomes bytype and labeling, codes concerning information productand voluntary andservice Total ofnon-compliance numberofincidents withregulations Requirements for information product andservice andlabeling approach ofthemanagement Evaluation approachThe management components andits ofthematerial topic boundary andits Explanation during theirlife ofoutcomes bytype cycle, concerning ofproducts andservices thehealth andsafety impacts ofnon-compliance codesIncidents withregulations andvoluntary categories and service ofproduct ofthehealth andsafety impacts Assessment approach ofthemanagement Evaluation approachThe management components andits ofthematerial topic boundary andits Explanation taken and actions onsociety andpotential impacts actual negative Significant New suppliersthatwere screened usingsocialcriteria approach ofthemanagement Evaluation approachThe management components andits ofthematerial topic boundary andits Explanation Disclosure period 2016-2018 life inthethree-year cycle of products duringtheir concerning thelabelling codes and voluntary compliance withregulations ofnon- incidents significant There have beenno methods ofdisposal of toxic substances, oforigin,presencecountry information isprovided on: labels. More specifically, they are marketed ontheir inwhich law inthecountry information required by product sector, report the the Group, regardless of products marketedAll by 55-57 36-37; 55-57 106-109 2016-2018 in thethree-year period ofproducts safety impacts concerning thehealth and codes and voluntary compliance withregulations ofnon- incidents significant There have beenno 52-53 52-53 36-37; 52-53 106-109 75-78 78 75-78 36-37; 75-78 106-109 number Page Omission Standard GRI 419-1 GRI 419: Socioeconomic compliance 103-3 103-2 103-1 GRI 103: Management Approach 2016 Socioeconomic compliance 417-3 Disclosure and economic area Non-compliance withlaws andregulations inthesocial approach ofthemanagement Evaluation approachThe management components andits ofthematerial topic boundary andits Explanation promotion, andsponsorship, ofoutcomes bytype advertising, codes concerning marketingand voluntary communications, including Total ofnon-compliance numberofincidents withregulations 2016 Page number Page services and useofproducts and concerning theprovision with laws andregulations fines for non-compliance received fees significant or In 2018theGroup not has 36-37; 52-57 36-37; 52-57 106-109 period 2016-2018 Group inthethree-year finesbythe of monetary determined thepayment consumer protection that non-compliance regarding of incidents significant There have beenno Omission

119 | Appendix - GRI content index 120 | Chi siamo engagements. This principle requires the planning and execution of procedures in order to obtain a obtain to order in procedures of execution and planning the assurance requires principle limited This for (IAASB) engagements. Board Standards Assurance and Auditing International the Audits Reviews or Historical of Financial (hereinafter Information" "International "ISAE of Revised"), 3000 principle issuedStandard the on Assurance by the Engagements with ISAE accordance GRI(Revised) in the 3000 - Assurance of Engagements performed has been work Other Our than requirements the Standards. with Report Integrated the of GRI the disclosure of compliance express, a conclusion basis the procedures to about the on the performed, responsibility is of our It responsibility Auditors’ compliance ethical with requirements, as a result, professional and, 1) (ISQC 1 standards Italia Control and applicable Quality on maintains Standard laws a quality and control system regulations. includes that International documented the policies applies and firm procedures audit Our regarding diligence, and competence Accountants, professional for Board confidentiality objectivity, and Standards professional Ethics behavior. integrity, of principles International the fundamental by on based issued Accountants Ethics Code Professional of the of for principles independence and ethics the h wit accordance in Weindependent are control independenceand quality Auditors’ matters toreport. The Directors are alsoevents. or responsible behaviors identificationthe material thefor stakeholders of from intentional and free is the of significant not or that fraud Report by caused Integrated misstatements the of a GRI of disclosure preparation the allow to order The Directors are also 2018. Report responsible Integrated the of notes” Methodological “ paragraph for that part of internal GRI GRI by as control ), described the (“ in Standards” issued 2016 - Global Initiative in Standards” Reporting that they the consider of GRI the disclosure of necessary preparation the Integrated Report for in accordance responsible in are the “Global with S.r.l. Group Reporting Initiative Benetton Sustainability of Reporting Directors The Report Integrated GRI the of the on disclosure responsibility Directors’ ). Report” Integrated on the ended year of GRI the disclosure “ also for index” GRI (hereinafter Content “ the in 2018 (hereinafter 31, referenced December ) subsidiaries its and Group” “ S.r.l. Group the or Benetton Group” of Benetton “ also 2018” Report Integrated “ the information and data into the on included engagement assurance a limited perform to appointed We been have S.r.l. Group Benetton To Board Directorsthe of of text) Italian original the from ion GRI(Translat index” Content “ the in and referenced 2018” Report Integrated “ the in included and information ondata report auditors’ Independent A member firm of Ernst & YoungLimited Ernst memberof Global & A firm deln.10831delibera 16/7/1997 n.progressivo Consob 2 al all’AlboIscritta delledi Speciale società revisione alIscritta Legali Revisori Registro Pubblicaton. 70945 sullaal Suppl. G.U. del17/2/1998 Speciale- 13 IV Serie P.IVA 00891231003 fiscaleCodice e numero di -numero iscrizione 00434000584 R.E.A. 250904 allaIscritta del presso S.O. la delleImprese Registro di C.C.I.A.A. Roma CapitaleSociale i.v. 2.525.000,00 Euro Roma 00198 - 32 SedePo, Via Legale: EY S.p.A. 31100 Treviso 20/b Viale Appiani, EY S.p.A. Tel:358811 +390422 ey.com 433026 0422 +39Fax:

121 | Appendix - Independent Auditors’ report 122 | Appendix - Independent Auditors’ report - - Furthermore, significant for consideringinformation, Group’sthe activities and characteristics: Report. Integrated the of GRI disclosure processing aggregation, collection, the andsupport that transmission procedures and processes the about ofinformation data and Group collect to information Benetton order in evidence of procedures, documentary management limited the and we have performed S.r.l. with discussions to and the department interviews conducted have we responsible particular, In for the preparation of the · · · procedures: following the performed have we particular, In appropriate. considered evidences obtain to documents order in Report, procedures other Integrated and the of GRI recalculations the disclosure in analysis, included information the of preparation our based on were Report professional Integrated judgment the and of includedGRI the on disclosure inquiries, primarily Company’s with performed procedures personnelThe responsible the for engagement. assurance a reasonable during that events and be identified would matters significant all of aware become we have it that hence, assurance and, provide not does a full engagement") assurance for Revised ("reasonable required ISAE that 3000 the to than was according lower examination examination our in performed work of extent the Therefore, material from free is Report misstatements. Integrated the of GRI the disclosure that assurance limited b) a) level, Group at . t Repor of management and detection significant qualitative generation, and the quantitative information to included lead in GRI the that processes the disclosure of Integratedthe of understanding Integrated Report with those included in the Group’s consolidated outcomes; financial process statement; the comparison the of economic for of validation and financial priorities data internal and the includedinformation to and identify in the GRI to categories applied disclosure stakeholders criteria the of the to different reference with Report, Integrated the of analysis processthe of relating definitionthe materialto of aspects included in GRI the disclosure calculation methods used to determine the indicators. procedures and the the of application appropriate and have evidence the obtained about and indicators performance locations, consolidated we the have to relevance carried site out visits during which activities, we have their based on hadselected discussions with management Benetton Retailfor Poland Sp. z o.o. (Poland) and Benetton we India(India), have Ltd. Pvt. that limited assurance procedures to ascertain on a sample basis the correct aggregation of data. of aggregation correct the basis sample a on and procedures ascertain to analytical both procedures assurance we performed have limited information, quantitative to reference with consistency the with available Integrated its the evidence;GRI verify of to the disclosure in documentation and acquired included supporting inquiries out we carried Report, information qualitative the to reference with readers English the has convenience language into been the This international report translated of solely for Partner Rubinato, Signed Maurizio by: EY S.p.A. Treviso, April 23, 2019 2018. Report Integrated the of the of notes” requirements Methodological the “ with accordance paragraph in the in aspects, as described GRI material Standards, all in December on ended prepared, been year the not has for 2018 S.r.l. Group 31, Benetton that of believe Report causes to us that Integrated the of GRI attention the disclosure our to has come nothing performed, procedures the Based on Conclusion

123 | Appendix - Independent Auditors’ report Acknowledgements Thank you to all the colleagues who give their collaboration for the success of this project.

Registered office Benetton Group S.r.l. Single shareholder company Villa Minelli 31050 Ponzano Veneto (Treviso) - Italy Corporate information Share capital: Euro 200 000 000 fully paid-in Fiscal code/ Treviso company registrar no. 03490770264 For information Roberto Taiariol Tel. +39 0422 519270 Nicoletta Sartori Tel. +39 0422 519269 [email protected]