SUSTAINABILITY REPORT 2009

Alcantara S.p.A. Letter from the Chairman 7 SECTION 3 Methodological foreword - How to read this report 9 SOCIAL 3.1 Human resources 49 SUSTAINABILITY 3.1.1. Composition of personnel and turnover 49 3.1.2. Diversity and respect for human rights 51 3.1.3. Incentive and remuneration systems 52 3.1.4. Training and development 54 SECTION 1 3.1.5. Industrial Relations 56 THE ALCANTARA S.p.A. 1.1 About us 13 3.1.6. Health and safety 57 IDENTITY 1.1.1. History 13 3.1.7. Internal communications and staff satisfaction 62 1.1.2. Alcantara S.p.A. today 13 3.2 Customers 64 1.1.3. Alcantara®: innovative material 14 3.2.1. Customer characteristics and analysis 64 1.1.4. Alcantara® sectors of application 15 3.2.2. Sustainability and product safety 66 1.1.5. Acknowledgments and awards 15 3.2.3. Customer Satisfaction and quality system 67 1.2 Governance and management systems for sustainability 16 3.2.4. New products and innovation/development 71 1.2.1. Corporate structure 16 3.2.5. Communications and events 73 1.2.2. Organisational structure 18 3.2.6. Conveying sustainability 74 1.2.3. Responsible management for sustainable development 20 3.3 Community 77 1.2.4. International certification 22 3.3.1. Contribution to developing the community 77 1.3 Sustainable development strategy 25 3.3.2. Perks and sponsorships in the various spheres of activity 78 1.3.1. Mission, values and principles 25 3.3.3. Activities in the area of research and creative innovation 78 1.3.2. Strategic approach and sustainability goals 26 3.3.4. Media relations 78 1.4 Stakeholders and listening, dialogue and involvement initiatives 28 3.3.5. Trade associations 79

SECTION 2 SECTIONh 4 ECONOMIC 2.1 General economic indicators 33 ENVIRONMENTAL 4.1 Alcantara S.p.A. and the Environment 84 SUSTAINABILITY 2.1.1. Management indexes and significant management data 33 SUSTAINABILITY 4.2 Environmental impact of Alcantara S.p.A 86 2.2 Added Value 34 4.3 Use of raw and recycled materials 88 2.2.1. Added Value determination statement 34 4.4 Energy requirements 90 2.2.2. Added Value distribution statement 35 4.5 Atmospheric emissions 91 2.3 Investments 38 4.6 Water requirements 101 2.3.1. Destination and comparison with plans 38 4.7 Waste production 102 2.3.2. Forecasts for 2010 39 4.8 Environmental investment 104 2.4 Suppliers and partners 40 4.9 Environmental education and other initiatives 105 2.4.1. Composition and type of supplier 40 2.4.2. Development of SA8000 responsible supply system 41 2.5 Public Institutions 44

G3 CONTENT CORRELATION TABLE 106 FINAL PUBLIC DECLARATION FROM TÜV ITALIA 116 Letter from the Chairman

“Our material is extraordinary: Alcantara® is a combination of aesthetic (beauty and elegance), sensory (softness and comfort) and functional values (easy maintenance, resistance and breathability), is suitable for multiple applications, and retains its precious qualities over time. The production process of Alcantara® is now further enriched by a new and important characteristic connected with sustainability: Carbon Neutrality.

The constantly changing and evolving macroeconomic scenario and the new perception of luxury, which can no longer be considered independently of ethics and respect for the environment, have pushed us to accelerate the corporate sustainability drive we adopted some time ago. A commitment that can be seen in our respect for the environment, the protection we afford our employees, and the special focus we place on health and safety in all our activities. We have set ourselves an important goal, which has become our absolute priority: that of becoming Carbon Neutral, reducing and entirely compensating for our CO2 emissions from the cradle (raw materials used) to the gate (the delivery of the material to our customers).

This is a strategic choice and not a legal obligation. We are fully aware that we are among the first to undertake, with great determination, such a highly demanding commitment, one that in short time has enabled us to achieve an extremely ambitious goal.

Our first goal was to use only energy deriving from renewable sources, reducing our emissions by 49% in just one year. Subsequently, all CO2 emissions generated by the material production process were compensated for with projects connected with alternative, hydroelectric and wind power energies in India, Honduras and New Zealand. The seriousness of our commitment is certified by TÜV Italia, the international body tasked with monitoring our progress.

Completely setting to zero our carbon dioxide emissions will enable us to increase the added value of Alcantara® and to satisfy the growing requests of corporate customers and partners in terms of ethical and environmental respect”.

Andrea Boragno, Chairman and CEO, Alcantara S.p.A. Methodological foreword How to read this report

The Alcantara S.p.A. 2009 Sustainability Report is the The reporting process company’s first report of this kind, and seeks to provide The Sustainability Report was drafted following an a yearly account of the activities carried out and the internal process designed to involve the entire company results attained in the economic, environmental and with contributions from different corporate areas. social spheres in the preceding three years. The areas covered by the report, and its periodicity, This Sustainability Report is a tool that, together with are the same as those analysed in the Balance Sheet, other traditional information tools, enables us to provide and take account of all activities that have a significant widespread and transparent communications based impact in terms of sustainability, in light of the requisites on the principle of “accountability” (which means of the GRI-G3 standard. providing an account, to relevant parties, of the actions Information was acquired using specific forms to being taken to fulfil the commitments undertaken in procure data from both internal documents and external the three areas of sustainability: economic, social and sources: the most relevant impacts were considered environmental). and a basic survey system was built up. Data has been generated mainly from current management tools such Guidelines adopted as quality, environment, safety and social responsibility The contents of the Sustainability Report were drafted documents. The Sustainability report contains both the according to the Sustainability Reporting Guidelines Corporate policies for quality and social responsibility (G3) outlined in the Global Reporting Initiative (GRI) and for health, safety and the environment. and in respect of the reporting principles expressed in same, including that of prudence (article 15 of the Rio Principles). Also used were the Social Report drafting guidelines drawn up by the Social Report Study Group and AccountAbility 1000, a process standard developed by ISEA (Institute of Social and Ethical Accountability) that focuses special attention on dialogue with the stakeholders. More specifically, Alcantara S.p.A. has developed an accounting process and a number of indicators to reach level A in the application of the GRI standard. Please Planning and Coordination: Alcantara S.p.A. refer to the correspondence table at the end of the Technical and scientific support: REvalue srl - Carlo Luison Report. Contatti per ottenere informazioni The first edition of this Sustainability Report has been Alcantara S.p.A. audited by independent third party TÜV Italia. A copy Via Mecenate, 86 of the public declaration is present in this report on 20138 Milano Telefono +39 02 580301 page 116. Fax +39 02 5063886 www.alcantara.com [email protected]

We would like to thank the entire internal Working Group and all personnel involved for their contributions to the development and realisation of the 2009 Sustainability Report. THE ALCANTARA S.p.A. IDENTITY 1 Alcantara S.p.A. is the company that manufactures and markets Alcantara®, the unique and innovative patented cover material developed using a unique and proprietary technology. Alcantara® is an extraordinary combination of sensory, aesthetic and functional qualities, and an ethical and social awareness that characterises contemporary lifestyles: the lifestyles of those that want to fully enjoy the products they use on a daily basis in complete respect for the environment. The little ® has enormous significance: it identifies the distinctive and unique technology, the advantages and lifestyles associated with the brand, and is also a guarantee that protects consumers against imitations. 1.1 About us

1.1.1 History Alcantara® is a versatile material used by the most prestigious international companies in many different sectors. Alcantara®’s incredible appeal is the result of a genuine technological breakthrough, an invention that first came to light in 1970. Alcantara® is the product of a unique and proprietary technology, as yet unparalleled, which ensures 12 that the product maintains its cutting-edge appeal and uniqueness over time. 13 Over the years Alcantara S.p.A. has consolidated significant technological know-how, enabling it to satisfy the 1 technical and stylistic requirements of customers and develop, on request, colours, product variants and new technologies in response to the most complex of briefs. Below is an outline of the key landmarks in the history of Alcantara S.p.A.

• 1970 invention of Alcantara®: Japanese scientist Miyoshi Okamoto files a patent for the production of the material; • 1972 agreement with ENI Group for the commercial use of the patent (Joint Venture between ENI Group and Toray Industries Inc. Group, who provided the basic technology); • 1972 creation of ANTOR S.p.A. (acronym for ANic TORay); • 1973 Antor S.p.A. becomes IGANTO S.p.A. (acronym for Italia Giappone ANic TOray), sealing the partnership between the two countries and the respective companies, with 51% of the capital stock allocated to the ENI Group and 49% to Toray Group; • 1981 Iganto S.p.A. becomes ALCANTARA S.p.A., with the capital stock still divided between the ENI Group (51%) and the Toray Group (49%); • 1995 definitive transfer of 100% of the company shareholding from ENI Group to Toray Group; immediately afterwards the Toray Group sells 30% to the Mitsui Group; • 1998 first operations in the Nera Montoro plant aimed at doubling industrial capacity; • 2002 completion of second operation aimed at doubling industrial capacity; • 2009 attainment of Carbon Neutrality certification.

1.1.2. Alcantara S.p.A. today Alcantara S.p.A. comprises: - the Nera Montoro plant, an integrated full-cycle plant. The complex production process is structured into a number of phases and stands out for its high level of automation. - the Milan Headquarters, which host the management offices and the company’s sales and administration departments.

At 31 December 2009 the capital stock undersigned and paid-up by Alcantara S.p.A. was equal to €10,800,000 and distributed as indicated below.

No. ordinary shares From 1 Euro per share Company % ownership 7.560.000 Toray Industries Inc. - Tokyo 70% 2.160.000 Mitsui & Co. Ltd. - Tokyo 20% 1.080.000 Mitsui & Co. Europe Holdings Plc - London 10% Alcantara S.p.A. does not possess in its portfolio, either directly or indirectly via trust companies or third parties, its 1.1.4. Alcantara® sectors of application own shares or shares of the controlling companies; it directly holds 30% of Toray Ultrasuede (America) Inc. and has Alcantara® has three main sectors of application, briefly described below. 100% control of PiGreco Srl (Italy). The controlled and controlling companies are not part of this report. AUTOMOTIVE The automotive industry, which imposes high quality standards, uses Alcantara® 14 without accepting any compromises or imitations. Alcantara® interiors guarantee 15 1.1.3. Alcantara®: innovative material 68% the driver maximum comfort thanks to the unique characteristics of the material (grip, breathability, resistance, softness, resistance to the light) and turn the cabin 1 ® The Alcantara production process, based on some of the most sophisticated scientific research at global level, of total revenue into a beautiful, elegant or sporty ambience according to the style required. is continuously monitored in all its phases. The significant technological component underpinning the production process allows for the creation of infinite combinations of customised colours and processes; the scientific research is among the most sophisticated at interior, contract & yacht world level and this openness to technological evolution is also manifest in numerous significant partnerships with From the living room to the drawing room, from the study to the bedroom, furniture the biggest European universities. covered with Alcantara® acquires a luminous, comfortable, soft and seductive The Alcantara S.p.A. Research and Development department is permanently committed to researching new 18% appeal. Alcantara S.p.A. has a Contract Collection dedicated to applications for hotels, offices and public spaces, which presents a selection of materials tested products, as well as renewing the existing underlying process and perfecting processes and products suitable for of total revenue and approved in accordance with legislation in force in each country. the market of the future. The functional features of Alcantara®, its resistance to marine environment agents, air permeability and excellent breathability guarantee pure pleasure when travelling by sea, even for the most demanding of passengers. The company Applications Development Centre oversees all activities aimed at evaluating the performance of the material, and studying and developing new technologies and processes, carried out on the request Fashion & accessories of partner customers. Thanks to the Applications Development Centre and to the work carried out with customers, In fashion, those who choose Alcantara® are looking for contemporary elegance, Alcantara S.p.A. can work on the features of the material and provide ad hoc application solutions. experimentation, and stylish detailing. Modern luxury with a close focus on the A focus on new trends and continued experimentation also form the basis for the solutions studied by the Stylistic 14% particulars and underlined by the exclusive textures of the material. Bags, hats, shoes, and belts in Alcantara® combine the beauty and softness Development team. of total revenue of the material with other exclusive qualities: the harmlessness of the product when in contact with the skin, breathability, durability over time. The innovation, related to the whole business process, regards the entire company: in addiction to the sustainability aspects, also the production infrastructure, the product, procurement, logistics, and communications, shaping a genuine business model. 1.1.5. Acknowledgments and awards

On 10 February 2010, as part of the celebrations to mark the centenary of Confindustria, Alcantara S.p.A. was awarded the “Andrea Pininfarina” Special Prize of the President of the Republic for excellence in innovation. The Prize, the highest award given to the best associate companies, was presented by the Chair of Confindustria Emma Marcegaglia to Andrea Boragno, Chairman and CEO of Alcantara S.p.A., and represents “a significant acknowledgment of the company’s commitment to innovation, always with the emphasis on excellence”.

Toray Prize In 2009 Alcantara S.p.A. was awarded the Toray Prize for safety for reaching 2.5 million hours without accidents, calculated according to international group criteria. 1.2 Governance and management systems for sustainability

Alcantara S.p.A. has governance and control mechanisms, and a complex management and certification system The Board of Statutory Auditors aimed at guaranteeing the sustainable development of the business in respect of laws and the economic, social The Board of Statutory Auditors is the company office that oversees correct administration, particularly the suitability and environmental equilibrium. of the organisational, administrative and accounting structure adopted by the directors and its effective functioning.

16 Oversight Committee 17 1.2.1. Corporate structure Has the role of supervising and monitoring the functioning, efficacy and observance of the organizational model 1 The Corporate offices that make up the Alcantara S.p.A. system of governance are the Shareholders’ Meeting, for the prevention of corporate crime, with the aim of preventing crimes falling under the administrative responsibility the Board of Directors, the Executive Committee, the CEO and the Board of Statutory Auditors. of Alcantara S.p.A., pursuant to the provisions of Leg. Decree 231/2001. The Board of Directors has established a Supervisory Committee pursuant to Leg. Decree 231/2001. Employees may notify the Oversight Committee and their immediate superior of any hypothetical violations of the Organisational Model and the Code of Ethics, as specified in internal communication 67/06, either anonymously Company officers or via a specific email address. Chairman and Chief Executive Officer Andrea Boragno Board of Directors Tatsuya Hosokawa The Organisational Model Taizo Ishihama The Alcantara S.p.A. Organisational Model was developed according to the provisions of the Decree and the Guidelines Katsuhiko Ito drafted by Confindustria, and was adopted by the Board of Directors with a resolution of 30 September 2005. The Organisational Model and the Code of Ethics are closely integrated in order to form a body of internal regulations Hiroshi Honji aimed at promoting a culture of ethics and corporate transparency. Koji Nagae The Model pursues the goal of developing a structured and organic system of monitoring procedures and activities aimed Jun Kobayashi at preventing, as far as is possible, the commitment of the offences listed in Italian Leg. Decree 231/2001 such as corruption or false communications, the exploitation of personnel and many other crimes (for which, until now, no implication exists for Board of Auditors Giovanni Primo Quagliano (Chairman) the Company) but also the prevention of behaviour regulated by the Code of Ethics, such as conflicts of interest. Giuseppe Scibetta Following the increase in the number of crimes connected with the managerial liability of legal persons, their heterogeneity and the subsequent monitoring activities entrusted to the “Internal Monitoring Organ”, on 8.10.2009 the Board of Directors Giuseppe Viganò decided to modify both the name of the “Internal Monitoring Organ” to “Oversight Committee”, and its composition, replacing the monocratic system with a system presided over by three members: The Board of Directors - Mr. Giorgio Maroli Internal member - Mr. Corrado Colombo Internal member Alcantara S.p.A is governed by a Board of Directors elected by the Shareholders’ Meeting. - Mr. Gianfranco Polo External member. The Board of Directors is divested with a broad range of powers for the ordinary and extraordinary management In light of the increase in the number of crimes connected with the managerial liability of legal persons, during the year a of the company and may carry out all actions it deems necessary to enforce and meet social goals. project was adopted to update the model with the aim of introducing it at the beginning of 2010. Also in 2009, Alcantara S.p.A. began training all personnel with regard to Leg. Decree 231 and possible risks. This activity will be concluded in 2010. Members of the Board of Directors are all independent and non-executive, aside from the Chairman and CEO. The directors take full responsibility for economic, social and environmental performances, which are annually subject to the approval of the Partners’ Meeting. Corporate management is supported by a structured reporting system on business trends and the progress of key The Board of Directors elects the Executive Committee as well as the CEO. 4.2 projects. This also allows for the correct application of incentive systems for managers in a context of supporting and promoting merit, and according to the extent to which pre-established goals have been met, including those The Executive Committee of environmental or social nature. The Executive Committee is divested with a broad range of powers for the ordinary and extraordinary management Alcantara S.p.A. has not activated specific communications channels that allow employees to directly interact with of the company and may carry out all actions it deems necessary to enforce and meet social goals, with the sole the Board of Directors. Nevertheless, in a bid to ensure continuous improvement, the Board of Directors evaluates exception of acts that the law assigns exclusively to the Shareholders’ Meeting and the Board of Directors. ongoing initiatives and future projects connected with its sustainability policy through the suggestions of departmental managers, employees and the various external stakeholders, via the actions of the aforementioned organisms. The CEO The CEO is divested with a broad range of powers for the ordinary and extraordinary management of the company and may carry out all actions it deems necessary to enforce and meet social goals, with the sole exception of those that fall under the responsibility of the Shareholders’ Meeting, the Board of Directors and Executive Committee. 1.2.2. Organisational structure The Company’s organisation chart stands out for its organisational structure based on the commercial divisions that characterise the Alcantara® business. The Nera Montoro plant is the site of all production activities, which take place under the supervision of the Technical Department, as well as the Research and Development Centre.

18 Of particular importance is the role played by the Technical Marketing department, which investigates the 19 requirements, critical necessities and technical/stylistic expectations of the customers and reference markets, 1 acting as a middleman between the technical and commercial structures.

board of directors

executive committee

chairman & ceo Management Representative for Quality, Safety, Environment and Corporate Social Responsibility

general manager

Human Resources, I.T. Logistics and Technical Finance and Control Marketing & Sales Technical Director & Systems Manager Marketing Manager

Automotive Certified Systems Demand & Supply Chain Production Head Accountant & Interior Division

Treasury and Payroll Fashion Division Purchasing R&D Credit Office

Personnel Plant and Corporate Technical Marketing and Technologies, Planning Organization Communication Trends & Design Quality, Laboratories and Control

Safety and Personnel H.Q. Tax Office Environment

Safety and General Technical Office Services

I.T. & Contract Manager

The Alcantara S.p.A. organisational model is based on the management of corporate processes according to the provisions of the quality systems. 1.2.3. Responsible management for sustainable development • operational efficiency of processes; Since long, Alcantara S.p.A. adopted a responsible management-based approach that enables it to remain • continuous improvement of processes and products; • meeting of established goals and objectives; economically, socially, and environmentally sustainable in order to: • respect for the general principles of the Toray Group philosophy, of which Alcantara S.p.A. forms part. • increase its added value; 20 • fulfil the expectations of stakeholders; The Management is committed to assuming an active role in the promotion and direction of all activities that contribute towards 21 ensuring constant improvement. • interpret the requirements of its customers; 1 • reduce environmental impact to a minimum; The guidelines for the attainment of these goals are: • to provide, activate and update the system of processes required for the Management of Quality, Safety and the Environment • provide the best quality standards. adopted by Alcantara S.p.A., and to ensure that complies with all applicable laws and provisions; • the wide promotion of the Policies for Quality, Safety, the Environment and Social Responsibility, and working to guarantee that More specifically, starting from 2007 Alcantara S.p.A. decided to align its internal management system with the related goals and objectives are pursued by all Company personnel; • ensuring the constant improvement of processes/products, using suitable tools and with the involvement of all personnel; requirements of the international SA8000 standard, continuing along the path it had undertaken in the area of • constantly monitoring the compliance of the system with applicable laws and provisions, and the other requisites adopted by Corporate Social Responsibility (Code of Ethics, ISO 9000, ISO TS 16949, ISO 14000, Leg. Decree 231). Alcantara S.p.A., managing deviations with suitable corrective action; The strategic focus on sustainable development thus translates into “Company policy for quality and social • the periodical review by the Management of the state and performance levels of the management systems for Quality, Safety, the Environment and Social Responsibility, and everything necessary for their improvement, also through special meetings with responsibility”, and is geared towards continuous improvement and maximum transparency. the Top Management; • ensure that the requisites of interested parties for the individual systems are disseminated and understood within the Company; POLICY FOR QUALITY AND SOCIAL RESPONSIBILITY • maintain an active link with interested parties outside the Company on aspects relate to the individual systems. Alcantara S.p.A. has chosen to base its competitive strategy on the concept of quality, and views the culture of quality as • promote and implement staff training programmes at all Company levels to disseminate the Policies for Quality, Safety, the an integral part of its Company assets. Environment and Social Responsibility, and provide necessary expertise to guarantee the satisfaction of the customer and the This Policy is consistent with Company strategies and considers the compulsory requirements, needs and expectations of interested parties, and the continual improvement of Management Systems; Alcantara S.p.A. customers and stakeholders to be of key importance. • promote all necessary preventive actions to anticipate deviations from product, process and system standards; The top management has also outlined in this Policy the Company’s commitment to complying with the requisites of the SA8000 • involve suppliers by promoting and implementing processes and procedures for the continuous improvement of performances; standard and all others adopted in the area of social responsibility, reiterating its commitment to conforming with national laws • maintain adequate levels of communications, internally and externally, also through official declarations and the drafting of and other laws in force, and respecting the following international instruments and their interpretation: specific reports. • ILO Conventions 29 and 105 (Forced and Obligatory Labour); • ILO Convention 87 (Freedom of Association); OBJECTIVES AND GOALS • ILO Convention 98 (Right to Collective Bargaining); The Management defines the objectives and goals in the Operating Plans. The Alcantara S.p.A. departmental managers • ILO Conventions 100 and 111 (Equal remuneration for men and women workers for work of equal value; Discrimination); contribute to defining the Operating Plans and guarantee its development so the established objectives and goals can be • ILO Convention 135 (Workers’ Representatives Convention); attained. • ILO Convention 138 and Recommendation 146 (Minimum Age and Recommendation); The Management Systems and, in particular, this Policy and the Operating Plans are periodically reviewed to guarantee their • ILO Convention 155 and Recommendation 164 (Health and Safety in the Workplace); suitability and efficacy. • ILO Convention 159 (Professional Rehabilitation and Employment of Disabled Persons); • ILO Convention 177 (Home Work); ALL PERSONNEL • ILO Convention 182 (worst forms of child labour); The Management and all personnel are responsible for implementing the Management Systems for Quality, Safety, the • Universal Declaration of Human Rights; Environment and Social Responsibility, for ensuring the satisfaction of customers, for development compatible with the needs • United Nations Convention on the Rights of the Child; of interested parties, and for meeting the objectives and goals in their areas of interest. • United Nations Convention on the Elimination of all forms of Discrimination against Women. This document is available to the public. PRINCIPLES The company policy underlines the importance of identifying goals and approaches aimed at: 30/09/2009 Chairman and CEO • guaranteeing the Safety and Quality of products placed on the market, going beyond the needs of the customer to ensure Andrea Boragno their loyalty through their increasing satisfaction; • develop diversification processes with new businesses and products; • increase the level of control over processes; • constantly improve management systems. On these bases, Alcantara S.p.A. therefore sets itself the following general goals: • identify the needs of the customers, increasing their satisfaction; • define and respect specific product, process and service features; • constant monitoring to ensure respect for legal and other applicable provisions; • extremely high service levels; 1.2.4. International certification Alcantara S.p.A. has attained the following international certification:

System Certification 22 Standard Subject Body First issued Most recent review Expiry/Renewal 23 Environmental UNI EN ISO 14001:2004 ICIM May 2000 (DNV) December 2008 July 2010 1 management system

Quality requisites ISO TS 16949:2009 ICIM February 2004 November 2009 November 2012 auto sector

Management system September 1993 UNI EN ISO 9001:2008 ICIM November 2009 November 2012 for quality (Certitex)

SA8000:2008 Social responsibility SGS October 2008 February 2010 October 2011

Greenhouse Gas TÜV ISO 14064-1 June 2009 February 2010 January 2011 Inventory SÜD Compensation residual CMS Standard GHG 41 of TÜV Greenhouse Gas June 2009 February 2010 January 2011 CARBON NEUTRALITY SÜD emissions ®

Product Certification Certification Validity Nautical sector: MED 96/98/EC (valid for individual brands/families) Obtained and maintained as of 2000 Oeko-Tex Standard 100 (valid for individual brands/families) Obtained and maintained as of 1995

In a bid to guarantee maximum transparency, Alcantara S.p.A. drafts and applies the DPS (Security Policy Document) for the handling of employee personal data pursuant to the provisions of the Italian Data Protection Commission in Leg. Decree 196/2003, which foresees the identification of figures entrusted with the management of these data.

® Alcantara S.p.A. was also one of the first companies to obtain Integrated Environmental Authorisation, which permits the operation of a plant, imposing measures in order to avoid or minimise emissions into the air, water and soil, and ensure high overall levels of protection for the environment.

Since 1 July 2008 Alcantara S.p.A. energy comes entirely from renewable sources. In June 2009 verification activities were carried out so certification could be issued attesting to the supply of electricity from renewable sources, and in order to monitor the correct use of “RECS - Renewable Energy Certificate System” certificates, acquired by supplier ENI with an investment of 44.400 Euro in 2009.

Since 2005 the Toray Group, to which Alcantara S.p.A. belongs, has been publishing a Corporate Social Responsibility Report. The Company is also present on the main sustainability index bundles: Dow Jones Sustainability Indexes, MS-SRI, KLD Global Climate 100 Index. 1.3 Sustainable development strategy

Alcantara S.p.A. is aware that sustainable development is a challenge and that seeking a balance between economic, social and environmental aspects is a serious commitment aimed at guaranteeing the development of the future generations. For this reason, it was a natural step for the company to embark on a sustainability drive aimed at renewing and 24 highlighting existing certification and corporate “good practices”, and continuously setting itself new improvement 25 targets. This commitment involved a review of its business model with an eye on sustainable development: all 1 company departments have made an active commitment to the project to reduce the emissions produced by the company, which attained “Carbon Neutral” certification for the entire Alcantara® material production process.

1.3.1. Mission, values and principles

Mission Alcantara S.p.A. operates in the high-end covering materials market; its distinguishing features are its use of sophisticated technologies, an exclusive business model, and a brand recognised at international level.

Alcantara S.p.A. bases its work on the values of consistency, correctness and transparency with the aim of providing technologically advanced and stylistically sophisticated solutions to satisfy the needs of the most demanding customers.

Principles Alcantara S.p.A.’s business activities comply with the principles of legitimacy, loyalty, correctness and transparency. Directors and employees are obliged to adhere to these principles and to express them in their daily conduct in the workplace, taking their inspiration from the principles of clarity, transparency and legitimacy, in full respect of the interests of shareholders as well as, naturally, the law. 1.3.2. Strategic approach and sustainability goals Environmental Sustainability Alcantara S.p.A. has adopted a strategic approach based on sustainability in the economic, social and environmental Area of activity What has been done in recent years What will be done in the next three years sense, and shares this commitment with partner companies and customers. Energy from • 2009: communicative advertising campaign on the use of • 2011: electricity supply from hydroelectric site adjacent to renewable energy from renewable sources production plant

sources • 2009: entire electricity supply produced from renewable • 2013: Next generation co-generation plant for the production E

N

V Social Economic ENVIRONMENTAL

I sources of eco-friendly thermal energy

26 R 27

l

O • Ethical certification • Made in Italy • Renewable sources ®

a • 2000: use, right across Alcantara material production • Other energy management activities

N i M

c • Corporate Social Responsibility • Resrch and Development • Monitoring of emissions process, of steam produced by co-generation plant o

E • Development and safety of • Easy-care/Self-care and high • Weight and sustainable

S N 1

T employees processing yield materials A L • Product safety • Carbon Neutrality Controlling • 2009: attainment of Carbon Neutrality (zero CO2 emissions) • Reduction in emissions connected with the import of raw emissions through the complete compensation of emissions materials

• 2008-2009: 49% reduction in CO2 emissions as a result of • Reduction in emissions connected with the transport of E conomiC the use of electricity only from renewable sources finished products to customer sites • 2007: Integrated Environmental Authorisation • Reduction in residual greenhouse gas emissions • 2000: UNI EN ISO 14001:2004 certification for the • Reduction in waste The Management defines the sustainability goals and objectives in its Operating Plans. The Alcantara S.p.A. conformity of the Environmental Management System • Taking and putting back into circulation the water used departmental managers contribute to drafting the Operating Plans, and guarantee their development so the goals without polluting the environment and objectives established can be met. The applicable law concerning corporate governance does not require specific processes for evaluating qualifications and performances of the Board of Directors. Weight and • 2008: Alcantara® is also produced using recycled raw • Broadening of the range of materials deriving from recycled sustainable materials: up to 25% of some products are made up of raw materials Nevertheless, the Board of Alcantara S.p.A. is continuously updated regarding all the management systems materials recycled raw materials • Increasing the re-use of raw materials and the production of in place (HSE, SA8000, quality) and the ongoing improvement for a responsible management implies a progressive • 2006: all production rejects are reused and/or recycled recycled raw materials • 2000: maximization of separate waste collection development of strategic planning for sustainability.

Social Sustainability Economic Sustainability Area of activity What has been done in recent years What will be done in the next three years Area of activity What has been done in recent years What will be done in the next three years Corporate Social • 2008: SA8000 certification, quality and social responsibility • Annual drafting of Sustainability Report Made in Italy • Alcantara® is Made in Italy: all production phases of the • Communicate Alcantara®’s unique Brand Positioning Responsibility policy and Organisational Model 231 • Satisfaction of the growing requests of customers and material take place in the Nera Montoro factory • Opening of USA market and consolidation of the Chinese • 2007: internal management system aligned with international partners in the area of ethical and environmental respect • 1998: authenticity certification, introduced for applications market standard SA8000 • Continued dissemination of the clause committing suppliers in Interior Design, which guarantee the originality and • Opening of Contract segment and greater contribution • 2005: code of Ethics to comply with SA8000 and audit extension requisites authenticity of the product to major ship projects

Employee • 2009: 22,843 staff training hours • Qualification of the sales network Research and • Every year Alcantara S.p.A. invests 3-5% of its turnover in • Develop more complex products that can shorten the development • 2008: 20,151 staff training hours • Identification of additional training spaces and improvements Development research and development. It also boasts a Research Centre value chain and safety • 2008: serious injury rating of 0 and investments in safety regarding safety management focused on the continuous improvement of products and • Confirm the tailor-made offer activities • Climate analysis processes: the only one of its kind in Europe. • Create a new Corporate Image and strengthen the Alcantara® • 2007: “Zero injuries” Project and serious injury rating of 0.03 • Improvements to the personal management process and In the last 10 years Alcantara S.p.A. has carried out two major Brand Identity as an aspirational contemporary brand introduction of digitalised system research projects with impacts in terms of sustainability and product performance: • High Durability Project (Structurally Durable Product); Product safety • 2008: investments to improve the quality of processes and • Continual improvement of processes and products • Fast Colour Project (Product with Durable Colours) the product • Definition and respect for product, process and service • 2007: use of only raw materials authorised by the most specifications stringent EU regulations (REACH) Improvement Easy-care/Self-care: • Promote company sustainability drive and product • 2007: internal procedure to evaluate potentially critical in quality of • Alcantara® is very easy to clean, • Protect the brand against imitation brands, incorrect use environmental and safety aspects of all new products Alcantara® • abrasive strength and resistant colours and unfair competition • 2006: availability of Alcantara® product with Sanitized processes and • pleasing aspect for many years certification products • is anti-scratch • 2000: certification of products for the marine sector • thanks to according to regulation EC 96/98 • the height of the lengths allows for high processing yields • 1995: Oeko-Tex Standard 100 Certification attesting to the harmlessness of the product when in contact with the skin.

System • 2004: certification according to ISO/TS 16949:2002 • Continual improvement of processes and products certification technical specifications for the automotive sector • Definition and respect for product, process and service • 1993: UNI EN ISO 9001:2000 Quality certification for all specifications business sectors 1.4 Stakeholders and listening, dialogue and involvement initiatives

Alcantara S.p.A. takes serious consideration of the indications and expectations of a multitude of stakeholders, ENVIRONMENT Carbon dioxide emissions (CO2) - Sito internet • Environmental associations Responsibility in the use of materials with environmental - Campagna mediatica which are subject to careful analysis. Once the main categories of stakeholders were identified, for each of these • Other organizations that sustainability qualities - Certificazioni specifiche the current structure, the most relevant issues, and the listening and dialogue activities underway were identified protect the environment Adoption of responsible behaviour - Reportistica ambientale • Local committees Conservation and promotion of cultural and environmental (even if not specifically dedicated to the reporting process). This mapping process was developed by following • Monitoring institutes heritage 28 the first phases of the stakeholder engagement process included in the AA1000SES guidelines and applying the Energy efficiency and renewable sources 29 Minimising environmental impact principle of materiality foreseen by the GRI-G3 guidelines. Protection of health and quality of life 1

Stakeholder Relative expectations Channels of dialogue PUBLIC INSTITUTIONS Compliance with laws - Website • Ministries Administrative regularity - Questionnaires HUMAN RESOURCES Fair remuneration - respect for employment rights - Intranet • EU Commission Respect for agreements in terms of employment, production - Corporate communications • Employees Professional growth and continuous learning - Mailing • Exchequer - financial police and profitability - Mandatory online communications • Collaborators Meritocracy - knowledge of goals - focus on results - Code of Ethics • Local institutes Transparent management - Authorisations and concessions • Union representatives Stability of workplace - Circulars on union notice boards • Provinces Absence of conflict, corruption and bribery - Conventions with Universities • Temps and interns Internal environment, collaboration and knowledge sharing - Press review • Regions - Protocols of understanding • Inspectors and other Clear organisation (of roles and means) and procedures - Newsletters • Universities and competent roles Health and safety in the workplace - Periodic meetings unemployment offices Equal opportunities and reconciliation between private life and - Open office initiatives • Chambers of Commerce work - Satisfaction surveys - internal questionnaires • Fire services and LHA Information and internal communications - After work activities • Regulatory authorities and Entrusting responsibility and delegation - Social events watchdogs Social dialogue and respect in industrial relations - Training courses Additional benefits (canteen, insurance, etc.) - Company prizes COMMUNITY Respect for human rights - Website - Periodical reports and statistics • Local communities Support local development - Meetings with schools • Consumer associations Create value for the community - Factories open for guided tours CUSTOMERS Product price and quality - Internet site • Sports associations Investments and creation about value in the community - Support for socio-cultural initiatives • Automotive Commercial correctness - Sponsorships and leaflets • Cultural associations Transparency and thoroughness of communications to the - Conferences, seminars (speakers or sponsors) • Interior Innovation - Balance Sheet and SA8000 • Religious institutions media and the community - Direct sponsorships • Fashion Environmental protection - carbon footprint - Promotional activities • Schools Support for research and innovation initiatives - Availability of resources for projects Correct communications and responsible promotional activities - Customer Satisfaction Review (evaluation • Media Creation of opportunities for young students or those looking - Agreements for internships Co-marketing activities documents) for work Product reputation - Participation in trade fairs Correct negotiations Conformity with regulations-laws on product for consumer - Certification protection - Code of Ethics - Advertising OTHER STAKEHOLDERS Commercial loyalty - Trade associations • Competitors Participation SHAREHOLDERS Evolution of current crisis - Balance Sheet • Trade associations Collaboration Uphold reputation - Shareholders’ Meeting • Auditors and certification Economic-financial equilibrium - Board of Directors bodies Transparency/Correctness in management - Daily interaction Business continuity and economic sustainability Economic independence and autonomy Company profitability Materiality analysis has made it possible to: SUPPLIERS Health and safety of contractors - Reference • identify relevant issues for the company and stakeholders; • Raw materials Payment timeframes and regularity - Evaluation questionnaire • Transport Collaboration in research and development projects - planning - Balance Sheet • identify risks and opportunities associated with sustainable development. • Services (consultancy Visibility/reputation - Participation in trade fairs bodies) Evaluation of ethical-social and environmental aspects - Collaboration in technological development • Energy Creation of opportunities and continuity of work for suppliers - Audit - qualification processes More specifically, Alcantara S.p.A. confirms its constant reduction of the impact of processes and production • Plants - machinery - Code of Ethics structures on the ecological equilibrium. The Company is also required to respond to old and new requirements such as safety and workplace stability expectations, the need to reconcile working and family commitments, problems connected with the delocalisation of production activities, and the use of suppliers operating in countries with a fairly underdeveloped legal system. Above all, there is a strong focus on the growth of “responsible consumption” and the widespread and growing emphasis on sustainability right along the value chain. ECONOMIC SUSTAINABILITY 2 This section of the Sustainability Report outlines Alcantara S.p.A.’s operating performance in order to highlight the economic effect (or economically expressible effect) that the Company’s activities have produced on a number of key categories of stakeholder. The economic and asset-related information and the calculation of added value expressed in this section were reported according to the principles of the GBS standard. 2.1 General economic indicators

2.1.1. Management indexes and significant management data In a context that has seen the gradual worsening of the international economic and financial crisis that first took hold in 2008, Alcantara S.p.A. has maintained intact its operational and investment capacities. This is the upshot of the positive results attained in previous years and the credibility that the company has gained among its economic 32 partners. 33 Alcantara S.p.A.’s commitment has therefore focused on two specific aspects: maintaining the quality levels attained 2 over time, and implementing a careful streamlining process aimed at conserving the competitiveness of costs in order to meet economic goals. The results achieved form a solid base and springboard for looking towards future challenges with confidence, dealing with the new problems that emerge, continuously implementing product improvements, contributing to sustainable development, and protecting the environment.

Below are the main balance sheet ratios.

Liquidity ratios 2007 2008 2009 Current ratio 4.32 4.15 4.47 Quick ratio 3.11 3.18 3.32 Financial leverage 1.21 1.22 1.19

Profitability ratios 2007 2008 2009 R.O.E. 5.0% 5.3% 3.4% R.O.I. 6.6% 6.3% 4.1% Sales margin 8.0% 8.1% 6.7%

Working Capital ratios 2007 2008 2009 Payables turnover ratio 2.78 3.04 2.42 Average number of days for payment 131.29 120.07 150.67 Receivables turnover ratio 5.33 6.00 5.47 Average number of days outstanding 68.49 60.84 66.71 2.2 Added Value

Within the Sustainability Report, Added Value is understood as the difference between the production revenues 2.2.2. Added Value distribution statement and costs that do not constitute a remuneration for company stakeholders. In this regard the concept of added value The calculation and distribution of Added Value expresses, in monetary terms, the relationship between the company adopted here is distinct from the more strictly accounts-related definition because it uses the methodology proposed and the socio-economic system with which it interacts, with particular reference to some of the primary stakeholders: in 2001 by the Social Report Study Group. • personnel: remuneration of employees; 34 • public administration: remuneration of public administration; 35 • financiers: remuneration of debt capital; 2 2.2.1. Added Value determination statement • shareholders: remuneration of venture capital; The determination of Added Value highlights Alcantara S.p.A.’s ability to generate wealth, in the period of reference, • company: remuneration of the company; on behalf of its various stakeholders, in respect of the cost-effective management requirements and expectations • community: perks and sponsorships. of same. DISTRIBUTION OVERALL GROSS CONSOLIDATED ADDED VALUE OVERALL GROSS CONSOLIDATED ADDED VALUE (euro/000) 2007 2008 2009 (euro/000) 2007 2008 2009 A) Payroll costs 20,112 20,690 19,244 A) Production value Employees 18,946 19,514 18,187 1. Revenues from goods and services 78,433 81,645 63,344 • salaries and wages 12,719 13,236 12,285 - revenue adjustments or bad debts • social welfare contributions 4.249 4.261 3.947 2. Variation in inventories of finished and semi-finished products, and products under development (1,006) 1,000 78 • staff severance pay indemnity 1,057 1,082 1,033 3. Variation in contract work in progress • other costs 921 935 922 4. Other income and revenue 130 197 511 Non-employed personnel 1,166 1,176 1,057 Typical production revenue 77,557 82,842 63,933 B) Remuneration of Public Administration 6,383 4,636 3,183 5. Additions for internal work 1,042 814 831 Direct and indirect taxes 6,383 4,636 3,183 Atypical production revenue 1,042 814 831 C) Remuneration of debt capital 1 3 3 Production value 78,599 83,656 64,764 Charges for short-term or long-term capital 1 3 3 B) Intermediate production costs D) Remuneration of venture capital 6,350 6,685 4,300 6. Raw, ancillary, consumable materials and goods for resale 17,173 18,173 14,626 Distributed share of profit for period 6,350 6,685 4,300 7. Services 22,989 26,269 19,266 E) Remuneration of the company 6,502 6,570 4,998 8. Costs for use of third-party assets 657 654 433 Share of profit charged to reserves 1 5 12 9. Provisions for risks 100 1.500 100 Depreciation and amortisation 6,501 6,565 4,986 10. Other provisions 750 - - F) Perks and sponsorships 72 58 58 11. Other operating expenses 43 44 34 GROSS OVERALL ADDED VALUE 39,420 38,642 31,786 Intermediate production costs 41,712 46,640 34,459 GROSS OPERATING ADDED VALUE 36,887 37,016 30,305 The ratio of consolidated Added Value for personnel fell in terms of absolute value by € 1,446 thousand (-7%) C) Extraordinary and additional items compared with 2008. However, in confirmation that a substantial part of the wealth produced is enjoyed by those 12. +/- Balance of additional operations that actively contribute to the development of products and services, the incidence on total Global Added Value Additional income (financial income) 2,809 3,470 1,644 went from 53.5% to 60.5%. 15.7% of added value created in 2009 was reinvested in the company; this figure - Additional costs includes the amortisation of investments made in the community. 13. +/- Balance of extraordinary items (276) (1,844) (163) Extraordinary income 414 290 213 The company’s financial solidity has meant that it has not needed to resort to external financers, limiting its - Extraordinary costs (417) (2.134) (376) spending in this area to just € 3,000, whilst the amount distributed to Public Administration was € 3,183 thousand GLOBAL GROSS ADDED VALUE 39,420 38,642 31,786 (10% of the total), of which € 2,590 thousand in direct taxation and € 593 thousand in indirect taxation. Alcantara S.p.A. receives no financing from Public Administration. The return on venture capital of € 4,300 thousand (13.5% of the total added value) was represented by the sum allocated for the dividend on the profit for the period. Finally, a sum of € 58,000 was allocated to perks and sponsorships: further information can be found in the chapter on “Relations with the Community”. 36 37 Below is a graphic representation of the distribution of 2009 Added Value. 2

Personnel 60.5 % Debt capital 0.0 % Company 15.7 % Public Administration 10.0 % Venture capital 13.5 % Perks and sponsorships 0.2 % 2.3 Investments

2.3.2. Forecasts for 2010 Investments made in 2009 amounted to € 7,241 million, of which € 476,000 for intangible assets, and includes The investment plan for 2010 is geared towards the pursuit of the policies adopted until now by the company, € 831,000 on the capitalisation of internal costs essential for the working cost of personnel in the maintenance maintaining a strong commitment to the area of “Health, safety and the environment”. departments and the technical planning office. The most high-profile projects include one aimed at containing energy consumption, for which spending of around 1 million Euro is planned. 38 39 2.3.1. Destination and comparison with plans Investment Plan 2010 2 The investments are separated into four main allocation areas.

Spending in financial period 2007 2008 2009 Streamlining and maintenance of machinery and quality standards 3,449 3,745 3,592 Health, safety and the environment 775 3,458 2,676 Streamlining and maintenance of equipment and quality standards 4,449 Research and Development 271 155 175 Health, safety and the environment 1,915 IT system, sales structures and other 112 287 798 Research and Development 180 total 4,607 7,645 7,241 IT system, sales structures and other 544

The “streamlining and maintenance” entry is generally constant over the years and constitutes the minimum necessary sum for maintaining and improving machinery, as well as the quality standards relating to production activities. The changing regulatory context, in terms of environmental issues and the broadening of all relevant provisions, has led to a substantial increase in the area of health, safety and the environment. This has also led to an increase in the already excellent level of safety, as also requested by Group directives. Investment choices always take account of the variables regarding environmental impact, and respect for human rights.

Investments in research, the environment and energy saving Alcantara S.p.A has long made substantial investments in research and development, the environment, and the reduction of energy consumption. More specifically, the company is currently involved in the 3-year FIT project (Technological Innovation Fund managed by the Ministry of Economic Development), in which it has made a total investment of € 3.261 million, and is waiting to discover the outcome of its application to the Technology District (being studied by the MUR - the Ministry of Universities and Research) for the development of new composites developed with micro and nanotechnologies, an investment under evaluation of € 961,000. The company places particular focus on environmental impact; in 2007-2008 it received regional funding to invest in reducing process waste and the recovery of sub-products, while it is currently involved in a number of products, the biggest of which is the ENERGIA 2009 tender of the Region of Umbria (part of POR FESR 2007-2013), currently being evaluated by the Region despite planned overall investments in high energy-efficiency plants and machinery to the tune of€ 2.341 million, which will allow for a substantial reduction in global energy requirements. 2.4 Suppliers and partners

Alcantara S.p.A. is committed to maintaining a relationship of mutual satisfaction with its direct suppliers of goods 2009 Suppliers Number % of total % spending and services, based on collaboration and respect for contractual terms. Region of Umbria 156 17% 14% of which in the Province of Terni 138 15% 13% When choosing its suppliers the Company applies a criterion of “proximity” (Company partners in the product Region of Lombardy 408 43% 46% 40 finishing process, Companies working at the production site, etc.), identifying the following areas of strategic supply: of which in the Province of Milan 336 36% 40% 41 • work carried out on the product; Other regions and countries 370 40% 40% 2 • contract services (companies operating within the plant); total 934 100% 100% • general services (decontamination and/or disposal of waste); • raw materials. Alcantara S.p.A. only uses raw materials authorised by the most stringent EU regulations (REACH); all new raw 2.4.2. Development of SA8000 responsible supply system materials are subject to stringent tests in terms of environmental impact and the safety of workers before being Goods and services suppliers work alongside Alcantara S.p.A. in order to adhere to the standards of the SA8000 used in the production process. project. Since 2007, the Company has asked its suppliers (in relevant sectors) to sign a letter of intent to comply with and observe all social responsibility requirements foreseen by the SA8000:2001 standard, as well as national The company also monitors the extent to which suppliers guarantee respect for SA8000 standards in terms laws in force and international provisions applicable to their sector and business. of social responsibility. For this reason, the supplier qualification and evaluation process has been integrated According to the data that has emerged so far, the majority of companies that work directly with Alcantara S.p.A. in order to qualify suppliers also for their ability to respect human rights and the principles of the ILO (International have adhered to the principles of the SA8000 standard. Labour Standard). With this aim, the checklist used as a working tool during the audits has been reviewed in order to integrate the points contained in the SA8000 standard. Supplier answers (at 31 December 2009) Also reviewed and improved was the system used to register evidence collected during audits and planned Supply type Supplier sector Letters of compliance sent Answers received corrective actions. Raw materials 31 27 Semi-finished products Finished products Raw Materials Utilities 3 1 2.4.1. Composition and type of supplier Packaging 4 4 In 2009, Alcantara S.p.A. had 934 active suppliers, 142 of which were classified as “priority” in terms Product finishing processes External processes 7 5 of sustainability as they are suppliers of goods and services that have significant economic impact, and which Maintenance 31 18 support activities whose effects may influence the evaluations of stakeholders. Contract and Logistics services Technical operations 11 4 Transport 4 3 The 142 “priority” suppliers in terms of sustainability are further subdivided according to their relationship with Technical Materials Inventory Materials 4 1 the Company. More specifically: Decontamination services 2 1 • 30 are “Super Core” suppliers that carry out their activities permanently and/or to whom outsourcing activities Waste disposal are entrusted (production process partnerships); Work Accessories 2 2 • 112 are “Core” suppliers that perform activities, even if not on a continuous basis, and/or that may potentially Leasing and hiring 5 3 General Services become production process partners and/or are suppliers of relevant raw materials. IT services 1 1 Various services 9 7 With specific reference to the territorial location of its suppliers, Alcantara S.p.A. takes a positive view of suppliers Purchases 11 5 that are based close to its Company offices. With the Company’s head offices in Milan and its production plant Travel and missions 1 1 based in Nera Montoro, there is a total of 564 local suppliers (60% of the total). total 126 83 A schedule of visits to suppliers was also drawn up, aimed at monitoring their commitment to guaranteeing the observance of the SA8000 standards in the area of “Social Responsibility”. Evidence was collected during these audits, carried out by qualified experts, and improvement plans were requested in order to address any shortfalls.

Visits carried out as at 31 December 2009 42 Supply type Italy Europe Total 43 Product finishing processes 6 - 6 2 Contract and Logistics services 4 - 4 Decontamination services and waste disposal 2 - 2 Raw materials 2 4 6 TOTALE 14 4 18

In order to further improve the activities designed to involve suppliers, in 2009 Alcantara S.p.A. identified the following activities: • the insertion, in supply contracts, of both a commitment to respect the requisites of the SA8000 standard, and the possibility of carrying out visits at the operating units of the supplier; • renewal of the visit schedule with visits made to suppliers of services, waste disposal and packaging; • continuous monitoring of suppliers to ensure that they continue to comply with the SA8000 standard, improving recruitment process of same; • use of first results of self-evaluation questionnaires in the drafting of the supplier monitoring plan for 2009, also evaluating, where necessary, the possibility of commissioning some visits to external companies.

More specifically, in 2009 Alcantara S.p.A.: • sent the letter of compliance to SA8000 principles to 126 suppliers, receiving an explicit commitment to observe the standard from 83, the equivalent of 66% of priority suppliers; • carried out audits at 18 suppliers. The audits regarded both the work spaces and additional areas (e.g. changing room, company canteen, etc.) and, in general, suppliers demonstrated a strong commitment to the principles. Improvement actions were requested where necessary. 2.5 Public Institutions

Alcantara S.p.A. has instilled relationships with the Public Institutions based on transparency and collaboration, in order to guarantee maximum integrity and honesty.

Collaboration with the Public Institutions 44 The following table summarises the various types of spending involved in relations with local institutes and the State. 45 The data highlights Alcantara S.p.A.’s substantial contribution to public spending. 2

FINANCIAL RELATIONS WITH LOCAL INSTITUTIONS AND THE STATE (Euro/000) Local Institutes 2007 2008 2009 IRAP (local business tax) 1,212 545 648 Waste disposal tax 44 42 39 Taxes and supplementary spending on utilities 22 22 52 Local property tax 140 140 140 Advertising tax 9 9 9 Various taxes due 19 11 10 total 1,446 769 898 State 2007 2008 2009 IRES (corporation tax) 4,507 3,419 1,953 Customs charges 364 380 276 VAT on gifts 50 57 44 Registration fee and government concessions 4 4 11 Various taxes due 12 7 11 total 4,937 3,867 2,295 SOCIAL SUSTAINABILITY 3 3.1 Human resources

Alcantara S.p.A. considers the quality of its human resources as a critical factor for the attainment of its strategic goals. A key element is that of entrusting people with responsibility at all levels, something that takes place via the relationship between managers and those that report to them. Alcantara S.p.A. pursues growth and the motivation of all of its staff through: 48 • the communication of goals and their significance; 49 • the monitoring and feedback of results attained; 3 • teamwork and knowledge of company processes; • the development of training programmes focused on professional growth at all levels; • the implementation of profitable policies that guarantee internal equity and competitiveness on the market.

In the area of human resources, these strategies are pursued through the definition of annual operating plans whose development is systematically monitored via company meetings.

3.1.1. Composition of personnel and turnover At 31 December 2009, Alcantara S.p.A. employed a staff of 356, 286 of whom work in the Nera Montoro plant and 70 of whom in the Milan office.

Personnel at 31 December 2009 2007 2008 2009 Number Men Women Men Women Men Women Directors 14 1 16 1 15 1 Managers 44 8 40 9 39 9 Office workers 59 37 60 38 58 37 Manual workers 197 10 196 9 188 9 314 56 312 57 300 56 TOTAL 370 369 356

Employees with open-ended contracts 288 56 274 56 261 55 Fixed contract employees 26 - 38 1 39 1 Full-time employees 314 54 312 55 300 55 Part-time employees - 2 - 2 - 1

88.8% of Alcantara S.p.A. personnel are employed on open-ended contracts; the remainder (11.2%) are employed on fixed-term contracts, mainly with apprentice contracts. The latter comprise newly-employed staff on the production lines who, until now, have always subsequently been offered open-ended contracts at the end of their training/work period.

The overwhelming majority of Alcantara S.p.A. staff is Italian and mainly resident in areas close to their workplace. The employment of local personnel for the production plant and research centre in Nera Montoro represents a tangible answer to the necessity of creating employment opportunities in the community. Personnel by qualification 3.1.2. Diversity and respect for human rights Year 2007 2008 2009 The Company has never openly or covertly discriminated against any party in the management of resources. Secondary schools and similar 102 101 94 In order to support this approach and protect workers, it is possible to make internal complaints, also anonymously, School leaver’s certificate 190 192 189 to the Oversight Committee. 50 Degree 78 76 73 Alcantara S.p.A. is also sensitive to the issue of equal opportunities, and intends to avoid all forms of discrimination. 51 TOTAL 370 369 356 On the make-up of the workforce, there is a constant presence, in terms of both quality and quantity, of female 3 employees, despite a production and industrial context that both historically and traditionally has always stood out Personnel by age range for the far greater numbers of male workers. Female personnel are not allocated to the heavier jobs nor, in particular, 2007 2008 2009 to shift work. Number <30 30-50 >50 <30 30-50 >50 <30 30-50 >50 In 2009, the female component represented 15.73% of the company workforce, continuously on the rise compared TOTAL 66 224 80 75 220 74 71 213 72 with the previous two years. Overall, female personnel are more qualified and younger than in the past. Alcantara S.p.A. carries out concrete In 2009, there were no major variations in terms of the distribution of personnel by age range in comparison with professional development activities for its female staff, giving them roles of increasing responsibility. 2008. The reduction in the average age, meanwhile, is a trend that has taken hold in the last few years, more markedly in the Nera Montoro plant where it is aided by the departure of retirement age staff and the employment SOCIAL ACCOUNTABILITY PROJECT of significant numbers of young personnel on the production lines. In 2007 Alcantara S.p.A., for some time focused and committed to respecting and protecting human rights, decided to continue on the ethical path it had undertaken, conforming its internal management system with the requirements In 2009 the average age at the Milan site fell to 42.44 years, from 43.12 in 2009; at the same time there was also of the SA8000 standard, i.e. the international standard which organisations can employ to attain third party certification a drop in the average age at the Nera Montoro plant: from 40.21 years in 2008 to 39.46 years in 2009. of their Social Responsibility Management System. In October 2008, following an inspection process, international certification body SGS issued Alcantara S.p.A. with SA8000 certification that attests to its respect for the requirements of the relative international standard. Turnover (overall arrivals and departures) In 2009, following the revision of the SA8000 Standard (ed. 2008), which ensured the greater involvement of the unions 2007 2008 2009 in the election of the role of Workers’ Representative, a new SA8000 Workers’ Representative was appointed for the Nera Men 26 22 12 Montoro plant. For the new Representative, appointed by the Company Union Representative and provided with a personal email account, Alcantara S.p.A. formalised and held a specific three-day training course designed to guarantee the best possible Women 5 5 3 working conditions. TOTAL 31 27 15 The Workers’ Representative for the Milan offices was already a member of the Workers’ Union (“Rappresentanza Sindacale dei Lavoratori”). Also published and sent to all company stakeholders was the SA8000 Report, which provides an in-depth description COMBATING THE CRISIS: A COMMITMENT NOT TO REDUCE STAFF NUMBERS IN 2009 of everything that is done at Alcantara S.p.A. to promote and protect workers’ rights and the ethical and social results achieved. Alcantara S.p.A. felt the effects of the international economic-financial crisis in 2009, registering a drop in productivity The document published for the first time in March 2008 was revised and is now available in its second edition and, as a consequence, turnover. In order to face up to the situation, the Company undertook and maintained a commitment to of March 2009 on the Alcantara S.p.A. website (www.alcantara.com). not reduce the size of its staff, but was forced to reduce its use of technical and production plant and relative direct and indirect activities, resorting to the Temporary Redundancy Pay (“Cassa Integrazione Guadagni Ordinaria”, CIGO) provision for a period All company personnel have been informed of the spirit and principles of the SA8000 standard during specific training activities of 5 weeks (23 March to 26 April 2009) for staff at both the headquarters and the plant, and of 4 weeks for apprentice staff at and meetings. the plant in July-August. Furthermore, an agreement was made with union representatives over the use of shutdown leave in the Summer and in December. In this light, in order to instil improved communications with employees, Alcantara S.p.A.: Alcantara S.p.A. has set up an internal Oversight Committee with multiple members, tasked with monitoring the • organised 3 meetings between the Company Chairman and Middle Management, during which the priority strategies and functioning, efficacy, observance and updating of the “Organisational Model” and the “Code of Ethics”, reference projects, as well as the results attained in response to established company objectives, were illustrated and commented; • delivered a letter from the Company Chairman to all employees outlining the reasons for the activation of CIGO procedures; documentation and expression of the Company’s values and choices in the area of responsible management. • minimised its recourse to third parties with Alcantara S.p.A. personnel carrying out activities that are normally outsourced; • only made use of individual holiday and leave entitlements to cover the production shutdown period in July and August which, in 2009, by way of exception, lasted 6 weeks (2 more than the usual 4 weeks taken during this period); Alcantara S.p.A. has never created situations or episodes that could result in the employment of child labour, either in • shut down production for a further week, during which training activities on health, safety and the environment were carried out. terms of its own directly employed staff, or staff employed by third party Alcantara S.p.A. contractors within its plant. Similarly, Alcantara S.p.A. has no intention of employing children or encouraging child labour in the future, either at its own premises or on those of its suppliers; as a result the Company has formalised, with a specific procedure, a procedure to follow in the event of notifications to this effect. Until now no cases of child labour have been reported within the company, and no notifications have been made to the Management Representative or Personnel Manager, or following controls at supplier premises.

All Alcantara S.p.A. employees have freely chosen to begin and maintain a working relationship with same. As also 52 indicated in the ILO 29 convention, none of them have been requested to carry out working activities against their 53 will or under any form of force or threat. No employee has ever been asked to deposit money or ID documents, and 3 nobody has ever left such deposits, even on their own free will. Until now no cases of forced labour, either real or presumed, have been reported to the Management Representative or Personnel Manager.

Alcantara S.p.A. is completely respectful and compliant with laws in force regarding the employment and integration of personnel belonging to the protected groups.

Personnel belonging to the Protected Groups Year 2007 2008 2009 No. Employees belonging to the Protected Groups 34 34 32 % Protected Groups vs. all employees 9,2% 9,2% 9,0%

3.1.3. Incentive and remuneration systems Alcantara S.p.A. promotes the management and motivation of people through incentive and development policies and tools. Every year sees the definition and implementation of operations not deriving from organisational changes and/or contractual provisions that focus on professional individual attributes.

Wage increases are recognition for consolidated professional growth and the acquisition of specific expertise in the Company role assigned, whilst personnel that make contributions or attain results above and beyond expectations and of significance to the Company, are rewarded with one-off bonuses.

The Company also has a variable wage structure related to the attainment of economic and performance objectives at both individual and team level. Every year the top management identifies those employees most significantly and directly involved in the attainment of these goals, and rewards them with a financial bonus commensurate with the extent to which the goals were achieved.

The top management, the managers and key Alcantara S.p.A. personnel are inserted in a variable incentive plan and, as a result, are evaluated on an annual basis according to the results they have attained. Middle Management staff not listed in the Company variable incentive plan are evaluated according to their responsibilities in terms of the manager-collaborator relationship. All staff employed and active at the plant are evaluated systematically upon every change of role, and in any case at least once a year. Furthermore, since 1995 there has been a participation prize, as established by the National Collective Labour Training Process Flow Agreement of reference, which every year is the subject of discussion and debate with the union representatives. The prize is variable by nature and is awarded upon final balance on condition that there has been an improvement in productivity and the Company financial performance, targets that are established at the start of the year by an 54 agreement between the Company management and the union. Realisation of Plan and 4 1 Analysis of training requirements 55 In 2009 the negative market conditions prevented negotiation of the participation prize. monitoring its implementation 3

Starting Salary Personnel with managerial profiles are employed following a competitiveness analysis with the external market and internal fairness. For newly-employed staff, or those with a few years of experience, a training and development plan has been created that, as well as fixing the salary and relative Company level upon employment, also entails periodical steps that, depending on Drafting of annual Training Plan 3 2 Monitor consistency of plans performance, allow for the adjustment of wage levels and conditions. and budgeted company costs Alcantara S.p.A. guarantees the minimum wage and contractual conditions to all personnel. The working conditions and salaries of experienced personnel are proportionate to the experience they have matured. At both the Milan site and the Nera Montoro plant, the Company guarantees a minimum wage that is higher than the minimum salaries applied at local level with regard to contracts in the sector. More specifically, Alcantara S.p.A. formulates its training activities following an analysis of requirements stemming from the production needs expressed by managers. During the year it is possible to implement unplanned training “Iter Laureati” is a development plan, in terms of pay and conditions, for the bedding in of young graduates in their first jobs and with little experience. The various stages of the development plan are monitored by direct managers and by the Personnel activities, approved in accordance with priorities and available financial resources. Department via integrated evaluations based on attestable and objective inspections. The results of the evaluations constitute a frame of reference for fixing salary levels, conditions and relative timeframes. Training hours by type 2007 2008 2009 Comparison between average wages: by gender and with respect to contractual minimums Technical and professional development 613 4,468 11,542 Percentage ratio of average female versus average male wage 103 / 100 Courses for new employees 8,730 8,663 - Alcantara S.p.A. wages versus minimum contractual salaries 113,3 / 100 Quality 204 2,933 141 Safety and the environment 1,528 4,039 12,128 These figures confirm Alcantara S.p.A.’s commitment to eliminating gender discrimination and offering higher wages, IT 169 48 32 on average, than the minimum levels established by national employment contracts. TOTAL 11,244 20,151 22,843

Through its training activities in 2009, Alcantara S.p.A. sought to strengthen the culture, expertise and environmental 3.1.4. Training and enhancement and safety awareness of its employees. The training of human resources, an essential tool for the construction, development and consolidation of The Alcantara S.p.A. training activities with specific technical content were carried out using internal teachers with professional expertise and know how, forms a systematic part of Alcantara S.p.A.’s strategic plans. appropriate expertise and professional experience. Personnel at all levels are directly involved in training activities/plans primarily: • when joining the company; In 2009 the training activities at the Nera Montoro industrial unit were focused on Leg. Decree 81/2008 “Consolidated • when assuming new roles within the company; Act on Safety in the Workplace” and general plant and specific role-related risks. Alcantara S.p.A. has also launched • following organisational variations and/or technical/technological innovations that significantly modify the the training activities related to the “Flexibility Project”, which seeks to mould professional figures that can cover more professional content of the job; than one position, and concluded the training for the addition of new employees to the production line with apprentice • as part of professional growth programmes. contracts. The latter were enrolled in a training programme designed to improve knowledge of the Company system, with a focus on quality, logistics processes, the innovation and utilities management process, and environmental measures.

Training at the Headquarters in 2009 was also mainly focused on issues pertaining to Leg. Decree 81/08 and the new content of Leg. Decree 106/09, which integrates and updates 81/08. Over the year specific attention was focused on the preparation of the Sustainability Report and actions relating Union representatives also enjoy legal privileges and leave entitlements so they can carry out their mandates, to Leg. Decree 231/01 “Administrative liability of legal persons” for all employees. in accordance with the provisions of the Statute of Workers’ Rights and the National Collective Labour Agreement; Despite the particularly difficult circumstances, investment in technical training and professional development they are therefore entitled to paid leave for their involvement in union negotiations, conferences etc. in the technical marketing and logistics area was viewed as essential. All Representatives of all organisations at all levels are free to communicate to their members in the workplace, 56 in respect of legal and Company provisions. Alcantara S.p.A. makes rooms available for union meetings, allowing 57 Training performance all employees to participate, as well as PCs and passwords for the gathering and management of information, 3 2007 2008 2009 and notice boards for union communications, also through the Company intranet. Man-hours 30 55 64 Cost (Euro) 47,375.00 56,713.00 30,632.99 In 2009 Alcantara S.p.A. and the union representatives were involved in managing company overcapacity caused by the global economic crisis. Both the temporary redundancy pay (in March and April) and the use of shutdown leave during the Summer and 3.1.5. Industrial relations at the end of the year were characterised by union agreements with the Workers’ Unions at the Milan office and the The goal of Alcantara S.p.A. is to consolidate a positive and constructive system of industrial relations at all levels, Nera Montoro plant. consistent with the strategic, organisational and cultural evolution of the Company, and geared towards maximum transparency in a participatory context. Alcantara S.p.A. fulfils the obligations undertaken upon the definition of the pension plans of its employees, pursuant On this basis, Alcantara S.p.A. maintains and develops relationships with workers’ representative organisations, to the law and the relevant National Collective Labour Agreement. based on a plan of mutual respect for their roles, expertise and independence, in order to better qualify the participation process and prevent possible situations of conflict from arising. Until now no reports of potential or existing obstacles to freedom of association or the right to collective bargaining have been made to the Management Representative or SA8000 Workers’ Representative. Members of staff to have joined union Number 2007 2008 2009 % of members (vs. total) 68% 69% 69% 3.1.6. Health and safety % of non-members (vs. total) 32% 31% 31% Alcantara S.p.A. has made a firm commitment towards its employees, customers and relevant parties to prevent and minimise the impact of its processes and products on health, safety and the environment. Company staff membership of union movements has remained stable around 70%, underlining how union activity This commitment is largely based on the desire to responsibly involve all personnel, developing their expertise and has not been blocked in any way. Indeed, plenty of time has been reserved for workers’ representative organisations knowledge in the process. and bargaining through open and continuous dialogue between the Company and the union. Daily risk prevention actions contribute to guaranteeing health, safety and the environmental protection for all This was also the basis for the agreements stipulated between Alcantara S.p.A. and the social stakeholders Alcantara S.p.A. staff. This commitment is manifest in a series of actions regarding: on various socio-economic issues such as working hours, participation prizes, flexibility processes, the activation • respect for relevant laws and regulations; of the multi-purpose team, the periodical meeting on prevention and protection against risks, and the provisions • the improvement of environmental efficiency and performance in the area of health and safety; pursuant to Leg. Decree 81/08 in the area of health and safety. • continuous prevention activities also carried out through training activities and information materials for personnel; • constant focus on the requirements of interested parties and the community in terms of health, safety and the All personnel are guaranteed by national collective bargaining. The applicable contract is the National Collective environment, with external communications and activities to raise awareness. Labour Agreement for employees in the chemical, chemical pharmaceutical, and chemical fibres industry, and the ceramics, lubricants and LPG sectors. The identification of risk factors and continuous improvement activities, with the aim of eliminating or reducing the The organisational changes required to improve the management of operations are implemented after the union possibility of damaging events occurring, has over time resulted in the gradual improvement of internal health and representatives have been informed, in an attempt to form an agreement between the parties in full respect of the safety performances. National Collective Labour Agreement. At contractual level, the National Collective Labour Agreement involves a minimum notice period for staff in the event of modifications to operations or organisational changes. 58 359 Injury overview: seriousness - injury frequency The seriousness index is the invalidating consequence of an injury, and highlights the number of days lost for each SERIOUSNESS Index Number of FREQUENCY Index INCIDENCE Index injury accident; it had a value of 0.03 in 2007, zero in 2008, and 0.04 in 2009. Number of days of absence per injuries with Hours worked injuries/hours worked* number injuries/number days lost injury/hours worked* absence 1,000,000 of employees *100 1,000 Seriousness index 60 2007 1 15 512.660 1,95 0,03 0,27 61 2008 0 0 525.824 0 0 0 1,6 Si = days lost X 103 3 2008 2 21 991 2,16 0,04 0,25 1,4 hours worked 1,2 In confirmation of Alcantara S.p.A.’s significant day-to-day commitment to guaranteeing heath, safety and 1 environmental protection, in recent years there has been a continuous positive reduction in the number of accidents 0,8 occurring. Analysis of the statistical data shows that, in comparison also with the three-year period separated 0,6 according to textile sector, chemical sector and total, the frequency index value relating to injuries is well below the 0,4 0,45 0,45 national average. 0,2 258 days 233 days 0,03 0,04 0 0 15 days 21 days Frequency Index 2005 2006 2007 2008 dic-09 * The total frequency index takes into account medication without the loss 50 of the ability to work. Alcantara S.p.A. is aware that prevention and continuous improvement are concepts that entail cultural change 45 Fi = n° injuries X 106 and a proactive approach. Alongside the consolidated actions (Safety Proposal, Safety Patrol, 3Z Project, Safety 40 hours worked Declaration, Health, Safety and Environment Plan, Disaster Prevention 2008 and 2009) that contribute to keeping 35 the “Alcantara System” lively and dynamic and that involve personnel at all levels, Alcantara S.p.A. has developed 30 specific projects to raise the awareness of staff in terms of health and safety issues. 25

20 “Zero Accident” Project 15 The aim of the “Zero Accident” project is to identify additional areas of improvement in terms of safety management and, more specifically, to focus on the goal of “Zero Accident”. 10 Forty months on from the launch of the project (June 2006 - December 2009), there have been significant improvements from 5 3,50 a technical/operational perspective, as underlined by the 1000 Safety proposals presented: proposals in the area 1,92 1,95 2,16 0 0 of health, safety and the environment that every worker has put forward to the Company management and for which each 2 1 1 2 worker must find an appropriate solution (either positive or negative). 2005 2006 2007 2008 dic-09 Another development area of the project is the prevention of possible causes of injury through proposals to remove possible risks; 135 proposals have been submitted on this issue. 50 Another characteristic activity of the project is the Safety Patrol, periodical internal inspections aimed at monitoring Consolidated data 2003-2005 the order and cleanliness of work spaces, the correct use of individual protective devices (IPD) etc. 45 (Industry and services) 45,23 The creation of specific work groups for departmental areas has resulted in the substantial participation of the entire 40 Company community.

35 30 30,79 Summary of “Zero Accident” Project results 25 June 2006 - December 2009 Presented Enacted Annulled 20 Safety proposal 1,012 819 95 18,31 16,48 15 Near accidents 159 159 0 10

5 0 Textiles Ind. Chem. Ind. Total Indu. Umbria 3.1.7. Internal communications and staff satisfaction Alcantara S.p.A. places specific focus on activities to improve employee communications tools with the aim of instilling strong collaborative relations between people, thus increasing their sense of belonging and the spread of Company values and culture. 62 63 In 2009 the internal communications plan resulted in: 3 • the development of a new Company intranet; • the definition of new communications channels with SA8000 Workers’ Representatives, Management Representatives and the Certification Body for SA8000 issues; • development of new forms of communication surrounding SA8000, such as the SA8000 letterbox.

Alcantara S.p.A. provides its employees with a number of benefits, including: • company canteen; • contribution for reimbursement of medical expenses through the FIDA sick fund upon presentation of certification attesting the treatment received; • Extra-occupational accident insurance policies.

Alcantara S.p.A. directly funds a portion of each of these initiatives. At the Nera Montoro plant there is an after-hours recreational and welfare centre for workers that organises cultural and sports activities. 3.2 Customers

Alcantara S.p.A. sets itself the goal of offering technologically advanced and stylistically sophisticated solutions The advantages of Alcantara® to satisfy the needs of its partners, in terms of both quality and services provided. To fulfil this goal, Alcantara S.p.A. Some processes typically associated with System Suppliers are carried out by Alcantara S.p.A. to shorten the supply chain and remain close to the customer (car manufacturer), guaranteeing qualitative improvements and contained costs. has chosen to work in partnership with its customers, in the knowledge that this means providing them with specific products and solutions, the result of an approach based on the continuous search for innovation. Management approach 64 Direct contact: 65 • for all projects, with car manufacturers, and their technical, purchasing, marketing and style offices; Alcantara S.p.A. has implemented a customer segmentation policy that enables it to improve the level of its services • with System Suppliers, from the cut through to the construction of the seats, door panels and other features of the vehicle 3 for target customers, providing them with a “broader” offer and a personalised service. Indirect contact: • for the “Aftermarket”, those companies that remanufacture cars and/or limited edition series, together with car manufacturers ® Alcantara is available in: or local importers. • a wide range of colours: a palette of hundreds of shades and the possibility of developing tones on demand according to customer brief. The experience acquired over the years has led to the creation of over 3000 colours, a thousand of which in the last ten years; for many applications it is possible to develop colours on demand in the FASHION & ACCESSORIES

space of just a week; Target customers • various thicknesses: 1.2 mm - 0.8 mm - 0.6 mm - 0.4 mm; The customers in the Fashion segment are companies that operate in the clothing and accessories sector (bags in particular) • various working heights (142-152 cm) and various lengths (0.5-100 m): this allows for the optimisation on the European market. of processing yield and/or to minimise the waste occurring as a result of obsolete customer goods; Characteristics of the market • numerous applications: thanks to the various complex techniques for processing the surface of the material The main market outlet is Europe, and in particular Italy, France, Germany and England, i.e. those countries where there is a greater presence of major fashion brands. (embossing, laser cutting, finishing, printing, perforation, lamination, electro and heat welding, electroforming), In 2009 the Fashion department worked with over 600 customers mainly in the high-end sector. The business sectors are it can be embellished with floral, geometric or abstract decorations, contrasting effects, and personalised motifs clothing, which constitutes around 50% of sales volumes, and accessories, which comprises the other 50%. on request. The advantages of Alcantara® In fashion Alcantara® is synonymous with modern luxury closely focused on the details and underlined by the exclusive textures of the material. 3.2.1. Customer characteristics and analysis Alcantara® accessories, bags, hats, shoes and belts combine beauty, softness and top performance (washability, breathability, Alcantara S.p.A.’s main business sectors are: automotive, fashion and accessories, interior (including contract durability over time). and yachting). Alcantara S.p.A. approaches the market through two main channels: Management approach • direct contact: sales to the customer; Direct contact: • with all major fashion & accessory brands • indirect contact: agents and distributors, chosen by the Company, interact directly with the market in potentially Indirect contact: significant areas. • through a network of representatives operating in the main markets

AUTOMOTIVE Target customers Interior, Contract & Yacht ® Car manufacturers benefit from the Alcantara range, whilst direct customers (those that process the material and to whom In the last three years the Alcantara S.p.A. interior and yachting markets have stood out for the outstanding loyalty Alcantara S.p.A. deliver an invoice) are System Suppliers. of key customers and the gradual loss of non-strategic customers. In the interior sector this phenomenon is Characteristics of the market particularly evident in the French and Italian markets which, together with the German market, represent around The automotive industry imposes high quality standards. European customers represent 95% of the manufacturers present on 65% of the division’s income. In the German market in particular, high end customers have been acquired or the reference market. Their trust in Alcantara® is underlined by their continuous involvement in new projects. In the last three years, German manufacturers have constituted the biggest market outlet, assuming a market share of close to retained, gradually replacing those historic customers heavily hit by the economic crisis. 70% in 2009. INTERIOR, CONTRACT & YACHT In the primary markets Alcantara S.p.A.’s commitment to sustainability is acknowledged by the most important and

Target customers prestigious customers as: Customers are the biggest domestic interior companies and distributors in potentially significant regions. • a response to some of the requirements of the market in terms of products and processes with minimum Contract customers (public spaces, hotels etc.) comprise architectural and design studios, and specialised companies environmental impact; (Contractors). The customers in the marine sector include shipyards for major ships, who work in close contact with specialist 66 architecture and design studios and ship owners, and the biggest yacht manufacturers. • confirmation of Alcantara S.p.A.’s reputation as a responsible company not only in the most direct circles 67 (regarding personnel and related processes) but also in terms of overall company policy. 3 Characteristics of the market The company’s successful relationship with Key Customers in the Interiors market is based on its “tailor made” offer. Alcantara S.p.A. places great focus on guaranteeing the health and safety of consumers and the comprehensiveness In terms of the Yacht and Contract market, certification is biggest barrier to gaining a foothold. The ability to provide broad-reaching, fast and punctual services (beginning with the samples) is also fundamental. of information found on the labels of its products. More specifically: • the Alcantara® Oeko-Tex label is a guarantee to end consumers that there are no risks to human health, The advantages of Alcantara® in accordance with the provisions of Oeko-Tex Standard 100; Alcantara S.p.A. works together with the most important customers, from the production of the furniture through • Upon the stipulation of contracts it provides customers with all information on its products and labels to its distribution to retail outlets, communicating the features of the product to the end customer in a consistent and targeted manner. For the Yacht and Contract sectors, Alcantara® materials are tested and approved according (composition, washing instructions, care and maintenance over time, resistance to abrasion etc.) and necessary to the laws in force in each country. training for the correct use of the material.

Management approach In 2009 no cases were reported or verified of non-conformity with voluntary regulations or codes regarding impact Direct contact: on the health and safety of products/services during their life cycle, or the information on and labeling of products/ • with Key Customers and customers that benefit from the “tailor made” offer • with Contract customers (public spaces, hotels…) services. • with a number of architecture and design studios, and contractors that request “tailor made” Indirect contact: • with a number of distributors for minor customers 3.2.3. Customer Satisfaction and quality system Customer satisfaction is a priority for Alcantara S.p.A., and for this reason it has developed a series of activities by which to measure it. This activity mainly involves the sales and technical marketing departments, and is carried 3.2.2. Sustainability and product safety out first and foremost through dialogue with the customer, for which the area managers, project managers and For Alcantara S.p.A. “Made in Italy” means quality, respect for the most stringent regulations, cutting-edge those involved in the stylistic development of the product are primarily responsible. This dialogue is the basis for the technology and an eye on style; “sustainable” means a respect for the economic, social and environmental continuous improvement of procedures, interfaces and response times. equilibrium. Every year a critical internal analysis is performed (CSR - Customer Satisfaction Review) based on the To guarantee this equilibrium and satisfy growing requests in the area of ethical/social and environmental respect, “customer-supplier” model, during which area managers and project managers act as spokespersons Alcantara S.p.A. has embarked upon a voluntary sustainable development path, the results of which, in terms of for the company’s customers. continual improvement, enable it to offer a safe product that respects the environment. During the CSR, customer satisfaction is measured using three specific indicators:

More specifically, the Alcantara S.p.A. offering is characterised by the following strengths: • Customer service level (On Time Shipment); • Since 2009 Alcantara S.p.A. is 100% Carbon Neutral: this means that it has defined, reduced and compensated • “Non-quality” level of reports by customers

for all CO2 emissions deriving from the entire production process, from the cradle (production of raw materials) • Overall evaluation rating (customer feedback) to the gate (the delivery of the material to the customer); • since 2008 the entire electricity supply comes from renewable sources; and a qualitative analysis tool regarding episodes of customer dissatisfaction (TGW Analysis - Things Gone Wrong • Alcantara® is durable over time and easy to maintain (easy-care and self-care); Analysis), which leads to activities or projects aimed at implementing improvements. • a number of variants of the material are also available that contain up to 25% recycled raw materials; TGW-Analysis has proved to be a very useful work tool, above all for the delineation of continuous improvement • the production process uses only raw materials authorised by the most stringent EU regulations (REACH); activities in the context of innovation and, in particular, “tailor-made” products. • Alcantara® complies with the supply conditions of customers and possesses the certification required by the Another tool takes the form of the company’s willingness to subject its Quality Management System to periodic reference markets. audits by customers and/or System Suppliers, typically in the automotive world. As regards Customer Satisfaction 2009, an analysis of the indicators illustrates further improvement with regards to both 2008 and 2007. In terms of Customer service level (On Time Shipment), a specific project to streamline the management process of the order cycle, from order acquisition, to the planning and programming of demand, and the distribution of the 68 end product, which began in 2007, posted its best ever results: 369 “On time Shipment” Service Level Improvement (% vs. Total Deliveries)

100,00 99,48 99,50 99,50 99,05 99,00 Goal

98,50

98,00 97,70 97,50

97,00

96,50 2007 2008 2009 F 2010

In terms of “non-quality” notifications, such claims made by customers represented a small percentage of total sales, and in any case a gradual improvement with respect to previous years as regards “non-processed goods”:

Improvement “Non-processed goods” notifications (% vs. Total Sales)

0,5 0,45 0,45 0,42 0,4

0,35

0,3

0,25 0,24 0,21 Goal 0,2

0,15

0,1

0,05

0 2007 2008 2009 F 2010 Improvement “Processed goods” notifications (% vs. Total Sales) 3.2.4. New products and innovation/development Every year Alcantara S.p.A. invests 3-5% of its turnover in research, and also boasts a Research Centre focused

1,4 on the continuous improvement of products and processes - the only one of its kind in Europe.

1,2 1,19 The Research and Development Department is constantly committed to research into processes and products

70 1 suitable for the market (on proposal), and the development of targeted solutions for the customer (on demand), 71 0,8 which comply with the sustainability path undertaken by Alcantara S.p.A. As such, it avails itself of the expertise 3 0,6 and activities of the Applications Development Centre and the Stylistic Development team. In the last 10 years Alcantara S.p.A. has carried out major research projects with notable impact in terms 0,4 0,29 of sustainability and product performance: 0,2 0,16 0,15 Goal ® 0 • High durability project (structurally durable product): Alcantara has a life expectancy of over 10 years and 2007 2008 2009 F 2010 has abrasion resistance of over 150,000 Martindale cycles; • Fast Colour Project (product with durable colours): Alcantara® colour can resist the most extreme radiation Overall, the feedback received from customers (mainly System Suppliers in the automotive industry) was generally conditions, without degrading; positive, confirming Alcantara S.p.A.’s reputation as a “Preferred Customer - Class A - A/B”. • Multilayer Project: a product that is highly adaptable to “design forms”. Up to 25% of its product weight may comprise of recycled materials; The TGW analysis, carried out in 2008, which had illustrated the need to improve a number of critical phases of the • Thin Project, thin product for the fashion sector; customised development process of new products and new colours, enabled the Company to plan and carry out a • Soft Project, soft product with a silky feel for the fashion sector. review of the Innovation Procedure (7B) in 2009, which was applied immediately in the same year. In the last three years, these projects have taken the form of specific products for various business sectors, and Other improvement measures implemented in 2009 that stemmed from the 2008 TGW were: the introduction of today form the basis for over 90% of the products marketed. an experimental procedure for the design and realisation of technical/stylistic prototypes to support the approval process of system suppliers on the automotive industry supply chain, and the introduction of a tool for planning In 2009 a new product was finalised and launched on the market: Alcantara® Stretch, a highly elastic material designed to trace personalised stylistic development activities, on the request of customers. the most sinuous shapes. Unique in its category, the product has a stretch-back value of over 20%, and it is also extremely pleasant to the touch thanks to the adoption of a sophisticated technology that combines Alcantara® with an ultra-light natural cotton.

Compliance with the supply conditions of customers is a prerequisite, both in the auto sector and in the relationship with important industrial customers in the world of interior and fashion/accessories. The awareness and interpretation of the needs of customers is one of key aspects of the Alcantara S.p.A. offer. Alcantara S.p.A. has never received sanctions for non-conformity with laws or regulations regarding the supply and Innumerable activities have been carried out to provide customers with a wide range of technical/stylistic solutions use of products, goods or services. and personalisation. Until now there have been no claims regarding the violation of privacy and/or the loss of customer data. The last three years have seen a major growth in the number of projects launched as part of the innovation process: Since 2007 the company has created a committee, overseen by the CEO, for the periodic evaluation of Product Liability. The Committee meets when it is necessary to begin marketing a new product, critically evaluating all Total “On Demand” + “On Proposal” Activities connected risks.

350 299 Quality system 300 Alcantara S.p.A. guarantees the quality of its products through the certification it has attained. From an operational perspective, 14 250 233 all phases of the management of relations with customers are reported in the Alcantara S.p.A. quality manual, beginning with the 211 16 commercial management process: creation of price lists, insertion of customer personal details, procedures for the economic/ 200 184 40 175 Fashion financial management of offers and customers (loans and credit). The management system is also applied 150 to sales negotiations: offer presentation forms, management of sales contracts (general conditions for sale, prices, receiving 148 124 110 Interiors of orders etc.), order acquisition methods and related confirmation, concluding with the organisation system for the delivery 100 61 49 Automotive of sold items. 50 29 32 32 52 61 The final process files summarise all post sales activities such as, for example, the management of trade receivables, 31 29 37 Diversification 0 5 4 management activities regarding claims, and the series of activities for monitoring customer satisfaction. 2005 2006 2007 2008 2009 The design of personalised products and solutions for individual customers or specific market sectors has a major impact on the overall business of the Company. In 2009, around 30% of sales were related to new products introduced to the industrial product portfolio in the last three years.

72 Innovations 2007 Innovations 2008 Innovations 2009 Total Sales %Sales from 73 Total Sales 2009 Sales 2009 Sales 2009 Sales 2009 Innovations 2009 Innovations 3 m m m m m % Automotive 120,844 200,293 108,990 430,127 1,219,544 35,3% Fashion 2,740 5,528 8,271 16,539 254,487 6,5% Interiors 58,529 3,539 7,490 69,557 277,334 25,1% Diversification 6,946 26,719 19,172 52,837 156,720 33,7% TOTAL 189,058 236,079 143,923 569,060 1,908,085 29,8%

3.2.5. Communications and events The main communication tools used by Alcantara S.p.A. to communicate to its customers are participation at sector events and trade fairs, editorial and advertising presence in the main information organs - at local, national and international level - the website, meetings at the Milan showroom, and Alcantara® Lab. In 2009, the website registered 300,000 visits and 250,000 unique visitors.

Alcantara S.p.A. promotes various initiatives aimed at the professional world through Alcantara® LAB, a laboratory for experimenting with new ideas and uses of the material. Alcantara® LAB is a virtual container of new expressive languages based on innovation and research, created in order to dialogue in a continuous manner with the creators of design; more specifically, it brings together events and initiatives focused on research that share the goal of dialoguing with users of Alcantara®. It is a place given over to experimenting with the material, with the aim of reinventing it and discovering new potential and features. The objective is that of forming a solid and lasting broad-reaching bond with the world of creativity, listening to all of the requirements of the various protagonists of design, and seeking to interpret them according the codes and values of Alcantara® LAB. The website www.alcantaralab.com outlines all of the initiatives carried out.

The correct communication of the Alcantara® product values and brand is central to the company’s relations with customers/partners. A section dedicated specifically to this subject is provided for in Alcantara S.p.A. distribution contracts. In its daily commercial relations with customers, Alcantara S.p.A educates the customer and its sales force on the correct communication of the material, using a series of tools (Alcantara® dictionary, colour charts and technical files, leaflets and company profile) and, in some cases, specifically in the Interior sector, directly verifying what is conveyed in sales points through mystery shopping activities.

The company participates at various Trade Fairs either directly or with a presence at the booths of its partners/ distributors. The principal trade fairs in the Fashion sector at which the Company participates directly are: Alcantara S.p.A. also participated at Good Design Hotel, a Rimini Fiera event organised by Code magazine. • Milano Unica, Milan, in February and September; Eight architecture studios designed an eco-sustainable hotel. The Premoli Silva studio used Alcantara® for the • Première Vision, Paris, in February and September. coverings and décor of a 5-star, 100% “green” hotel room. Alcantara S.p.A. is also present at its distributor’s booth during the Munich Fabric Start Trade Fair.

74 International Campaign 75 In the Interior sector, the company participates at the following trade fairs: In order to convey its commitment to sustainability, Alcantara S.p.A. has created one-page 3 • Maison & Objet, Paris, in January; advertisement focused on the use of energy from renewable sources, as well as certification and “good environmental practices” established over time. • Orgatec, Cologne, in October (every two years). The page was published in major national and financial newspapers in Italy, France and Alcantara S.p.A. participates at the Fuorisalone di Zona Tortona during the Salone del Mobile Trade Fair in Milan Germany in July and August 2009. A radio advertisement was also broadcast on the Lifegate with specially created designs and installations; in 2009 the second edition of Alcantara® Design Museum was radio station. presented at Superstudiopiù in via Tortona.

Alcantara® is also featured in the interiors of vehicles on display at the principal car shows from Frankfurt, to Geneva and Paris as well as the Bologna Motor Show. Alcantara S.p.A. sponsors and participates at events and activities in various spheres. It has always been very attentive to the art world. In 2009, the company appeared once again at Mint (Milan Antiques and Modern Art Fair), with a lounge area installation. The same activity has been created for the Roma Contemporary Art Trade Fair. “Director’s” chairs, handbags and soft Moleskine notebook covers were created for Spazio Forma, the prestigious Milan-based centre dedicated to photography. In 2009, Alcantara S.p.A. also decided to communicate its sustainability activities both internally, with a special presentation, and externally with various methods according to the target.

3.2.6. Conveying sustainability More specifically, in order to better communicate with customers, partners and distributors, a presentation, leaflet In 2009, Alcantara S.p.A developed many communications initiatives linked to sustainability. More specifically, and postcard have been prepared. The press has been informed with a Press Kit. A press meeting was held in Italy it participated at Love Design, an exhibition-market dedicated to the purchase of design products at particularly for specialised journalists from the sector, mainly design, with the participation of the Chairman and CEO. economic prices to support Airc (The Italian Cancer Research Association) and their battle against cancer. Alcantara S.p.A contributed to this exhibit-market, organised also thanks to the participation of ADI (Industrial Design Association) member companies, by donating two Cappellini sofas and four stools covered with the precious material as well as promoting the event. http://www.lovedesign.airc.it/

Another “sustainable” project in which Alcantara S.p.A participated was Cittàdellarte, a large experimentation workshop promoted by artist Michelangelo Pistoletto and Vogue Editor-in-Chief Franca Sozzani to promote use of sustainable materials in the fashion world. http://www.cittadellarte.it/

In October, the Company participated at “Viva l’auto”, the annual encounter between Italian journalists in the automotive sector to elect the European Car of the year. This meeting involved conferences and debates, and the theme for the 2009 edition was sustainability, with particular attention focused on the environment and carbon dioxide emissions. An Alcantara® lounge was created specifically for this prestigious event, and the area was given over to meetings and analysis with the press. http://www.vivalauto.it/ 3.3 Community

Alcantara S.p.A. has always made it a point to communicate in a continuous manner with the community abiding by the criteria of transparency and fairness and to make its sensitivity towards the sustainable development of business and territory known, searching out the collaboration of the community for the realization of this ambitious goal.

76 Alcantara S.p.A.’s “Community” is made up of the following components: 77 • For the Milan-based office: the associations in the area (Zona Mecenate, of which the company forms part, ADI - 3 Industrial Design Association, the National Chamber of Italian Fashion, Material Connexion), trade associations, the press and media in general. Through its advertising activity aimed at the end consumer, the company addresses “design lovers” for the most part, who choose the material to cover objects which surround them every day, while through activities addressed to professionals and the “creative laboratory” Alcantara® LAB, it comes into contact with designers, industrial designers and fashion designers as well as the business to business world that use Alcantara® for their creations; • For the Nera Montoro plant: Alcantara S.p.A. communicates with associated institutions and develops initiatives aimed at supporting the local community, in view of the fact that it is an important local manufacturing plant and as such, a point of reference for many workers and families;

These communities are indirectly joined by others where projects regarding energy generated from renewable sources are stationed (Honduras, New Zealand, India) and to which Alcantara S.p.A. contributes in terms of improved social, economic and environmental wellbeing.

For the development of communications with the community, the company uses the main tools of information and, more specifically, the websites www.alcantara.com and www.alcantaralab.com.

3.3.1. Contribution to developing the community For over 15 years, Alcantara S.p.A has been committed to the environment, with increasingly significant results: the latest target reached is that of Carbon Neutrality. This is the company’s most significant contribution in favour of sustainable development in the areas in which it operates (Milan and Nera Montoro), the communities in which it invests in renewable energy plants (Honduras, New Zealand and India) and the environment in general.

The “Zona Mecenate” project is Alcantara S.p.A.’s contribution to the development of the new centre of designing creativity in the south-eastern area of Milan, in which the company’s headquarters is located, delegated as an industrial area until now. “Zona Mecenate” is a creative community that is the result of the common will of eclectic professionals working in the creative sector, communications, architecture and design. Alcantara S.p.A. is one of three founding associates and has been on the Board of Directors since its formation, aside from contributing to the activities of the association, to which it pays an annual membership fee as well. The realization of the first project is forecast for autumn 2010 - a year dedicated to aviation: an open air exhibit featuring some of the most significant images of the Caproni workshops in which many airplanes were built. 3.3.2. Perks and sponsorships in the various spheres of activity The most popular means of communication for both targets are the press (newspapers, weekly and monthly Alcantara S.p.A. sponsors and participates at events and activities in various spheres. These initiatives bring magazines dedicated to interior design, automobiles, fashion and lifestyle in general) and the web. benefit to the community in terms of service use (example: lounge areas) and awareness regarding sustainable development. The company’s editorial and advertising presence in the major media is managed at local, national and international 78 level. More specifically, Alcantara S.p.A prepares its communications campaigns, regarding both the brand name 79 During the year 2009 these initiatives have supported the Abruzzo Region. The company donated €2,987 and and the applications of the material, mainly for the European market - Italy, France and Germany - and, in a very 3 employees also supported the Confindustria initiative. An additional contribution of€ 566 arrived through Telecom. targeted manner, for China and Japan as well. The Company invests on the web also, on specialised sites and portals for professionals, creating specially designed Other past events include the support offered in 2008 to the “Veneranda Fabbrica del Duomo”: a creation of two banners, buttons and advertorials based on the subject matter. front panels and one side panel on the Duomo di Milano, installed during the Salone del Mobile (April and May 2008) Periodic media monitoring takes place through a digital press clipping service that indicates and highlights advertising and editorial articles. 3.3.3. Activities in the area of research and creative innovation In the field of university research, more specifically in the sphere of the “High-performance products for automotive Contacts with the press, B2B and B2C, are kept by Alcantara S.p.A. directly and through its press agency in Italy interiors” project, Alcantara S.p.A. entrusted a portion of research activity to third parties, leading to partnerships with: (corporate press agency as well as one dedicated to the automotive world), France and Germany. • Institute of Textile Technology (ITA), Aachen University of Technology in Germany; Relations with journalists are ongoing: press releases and kits are prepared for trade fairs, events and important • Chemistry Department of the University of Perugia; innovative projects, and the Company also responds to and satisfies requests from journalists for information, • Engineer Department of Materials and Production at the Università di Napoli (Naples, Italy). interviews, and material samples for press services. Press days and appointments are also organised with the press during important events such as the Salone del Mobile. For several years the Company has been on the Board of Directors and the jury of MittelModa, one of the most Journalists are invited to all company trade fairs and events. prestigious international competitions dedicated to the discovery of young talent in the fashion world and in 2007 it began a collaboration with Milan’s Istituto Europeo di Design di Milano (IED) with the goal of introducing students to the evolution of the Alcantara® brand and its communications. 3.3.5. Professional associations Alcantara S.p.A. supports many associations and/or institutions through its membership and direct participation with In 2009, Alcantara S.p.A. financed a scholarship for the first edition of the Licensing & Upgrading graduate course the goal of supporting business representatives and benefiting from services provided. at POLI.design, a Politecnico di Milano consortium. The Master’s course will be held in 2010 and will include the development of specialised skills for such activities as licensing, brand extension, contract and merchandising Below is a list of associations with which Association in fashion and the high-end sector. Alcantara S.p.A. was registered in 2009. ADACI (Italian Suppliers Ass.) ADI (Industrial Design Association) AIAS (Ital. Safety Operators Ass.) In some cases, of particular interest, the Company supports young talents who study fashion or interior design AICQ (Ital. Quality Centre North Ass.) ® by providing them with free samples of Alcantara products. AILOG (Ital. Logistics Ass.) AIM (Ital. Macromolecule Ass.) AREAPELLE ASSOFIBRE 3.3.4. Media relations ASSOLOMBARDA Alcantara S.p.A. makes use of the major media sources to communicate the initiatives it has undertaken to ASSOTERNI stakeholders and to provide all information necessary to ensure the correct perception of the Company. AUSED More specifically, Alcantara S.p.A. uses the media to address: CAMERA NAZIONALE DELLA MODA CREDIT MANAGER • professionals (architects, designers, contractors, fashion designers, partner companies) - all of whom FEDERCHIMICA are addressed through B2B campaigns; MATERIAL CONNEXION • end consumers (“design lovers”) - who are addressed through branding and product campaigns. MITTELMODA TEXCLUBTEC ENVIRONMENTAL SUSTAINABILITY 4 82 483 4.1 Alcantara S.p.A. and the environment

Alcantara S.p.A. is actively committed to preventing and minimizing the impact of its processes and products HEALTH, SAFETY AND ENVIRONMENTAL POLICY on the environment. 10 PRINCIPLES OF ACTION This commitment is manifest in a series of actions regarding: The Management is committed to implementing management systems designed to guarantee the constant control of issues • improvement of environmental efficiency and environmental impact produced; regarding environmental, health and safety protection at the workplace. 84 • continuous training and information on the most important environmental issues; 85 1. Responsibly respect relevant laws and regulations and, when necessary, establishing and guaranteeing the observance • external communications and awareness raising. of internal provisions and requirements. 4 2. Establish and maintain partnerships with local organisations in regards to health and safety issues and the environment, more specifically by controlling energy consumption and waste as well as production rejects that can be recovered. The attention Alcantara S.p.A. focuses on environmental issues is also underlined by the significant certification 3. Implement a system for reporting environmental events (as is the case with health and safety), defining the standards for it has attained: a system of indexes on environmental indicators to be kept under control, and divulging them to personnel. • since 2000, the Environmental Management System (EMS) in compliance with ISO standard 14001:2004 4. Establish information and control measures to ensure that contractors working on the site enforce suitable regulations, procedures and plans regarding the risks connected with their activities and those inherent to areas where they are carried certificate, which keeps the impact caused by activities carried out during various production phases under out (regarding both environmental issues and health and safety at the workplace). control in a systematic manner; 5. Establish emergency plans and implement procedures to effectively and promptly deal with work-related emergency • Integrated Environmental Authorisation (IEA), obtained in December 2007 as part of an Umbria-based pilot situations or accidents. Provide the public authorities with as much information and help as possible for events that could have an impact outside the workplace. group, and valid until 2013. It incorporates all previous authorizations regarding Environmental Emissions, 6. Adopt, apply and share with the managers of all main processes an organisational model of administrative responsibility, Wastewater and Waste Management in a single authorization following a regional Service Conference. pursuant to L.231/2001, that is consistent with the policy of health and safety at the workplace and the internal activities of the Company. IEA involves a series of duties that must be respected by the plant manager; more specifically, it entails the 7. Inform all stakeholders of the organisational, technical and economic commitments made to protect the environment, planning and monitoring of environmental aspects relative to: environmental emissions, wastewater, noise health and safety as well as the performance level reached regarding these issues, objectives and forecasted pollution, waste, energy, water resources, soil and subsoil protection, as well as the periodical communication improvements. 8. Guarantee the expertise, training and awareness of all personnel and implement job rotation to further protect their health of the results of these activities to ARPA Umbria. The competent authority (ARPA) carries out periodic audits and and safety, particularly in high-risk areas. analyses at the plant to evaluate the Company’s respect of these rules and the improvements accomplished. 9. Minimize the exposure of workers to risk through prevention and training of exposed workers. 10. Guarantee suitable resources and means to enforce this policy, implement the Management system, verify its suitability and proper application, conduct periodic reassessments, implement preventive measures and improvement interventions. Alcantara S.p.A has a Safety and Environmental Policy which outlines the guiding principles of all activities, the management approach and organizational responsibilities. This policy is applied through the definition of goals and improvement targets, the implementation of annual Operational Plans, the implementation of Environment, Health and Safety Management systems with maximum dissemination to all levels of the Company. It is the responsibility of the Management to ensure that this Policy is respected. The Management ensures the means and delegates the necessary authority to the management Representative for the quality, safety, environmental and social responsibility management system so that this Policy is carried out right across the Company. It is the duty of each employee to behave in a consistent manner and in compliance with this Policy. This document is available to the public and complies with the declaration contained in the HSE Management Manual.

30/09/2009 Chairman and CEO Andrea Boragno 4.2 Environmental impact of Alcantara S.p.A

The full-cycle manufacturing of the product takes place in the production plant and Research centre in Nera The macro typologies of environmental impact are related to the use of energy obtained from renewable resources, Montoro, in the province of Terni. the storage and use of chemical products, atmospheric emissions, waste deposited in bodies of surface water, production and waste management, the management of the internal landfill for muds produced by the water The Alcantara S.p.A. production process begins with two polymers, from which the end product is attained treatment facility and solvent use cycle, the use of natural resources, noise pollution and safety. 86 following a series of processing phases. The material undergoes final transformation processes according 87 to its end use. Alcantara S.p.A., in accordance with the provisions of the certified Environmental Management System, has 4 Raw materials and energy are used at the production plant, and the end product is created according to the identified all significant environmental interaction parameters regarding atmospheric emissions, wastewater, noise diagram below. pollution, waste, energy, water resources, protection of the soil and subsoil. These parameters are monitored continuously and evaluated as part of the Management Re-examination foreseen by the system. alcantara® Production Alcantara S.p.A. organised a third party examination with a specialist Company so an environmental impact Processes Sub-products assessment (EIA) could be carried out. The results were as follows: • the authorisations requested by regulations for the correct environmental management of industrial sites were SPINNING Alcarene® regularly attained and are in the process of being validated; • the provisions of the Integrated Environmental Authorisation were correctly observed; for some, work is still taking FELT Alcanol® place and will be completed by the deadlines outlined in the authorisation; • periodic checks on waste, environmental emissions, and waste deposited in surface water were carried out GREIGE regularly, according to established timeframes and methods, and produced results in line with the limits imposed

Raw Materials by laws in force; Wastewater Energy DYEING Waste • the documentation consulted regarding the management and movement of waste was correct from a formal Water and regulatory perspective. FINISHING End product 4.3 Use of raw and recycled materials

The Alcantara S.p.A. production process uses only raw materials authorised by the most stringent EU regulations. Use of recycled materials All new raw materials are subject to stringent tests in terms of environmental impact and the safety of workers before U.M. 2008 2009 being used in the production process. Quantity recovered Kg 365,669 265,352 Alcanol® The potentially critical environmental and safety aspects of all new products are evaluated via an internal procedure Percentage recovered % 88% 89% 88 that involves all company departments. The results of the evaluations are examined by the management before they Quantity recovered Kg 730,737 501,733 89 Alcarene® are authorised to be introduced on the market. Percentage recovered % 91% 90% 4 Textile waste Quantity recovered Kg 159,803 320,000 All additional raw materials are processed in situ, recovered and re-used in the production cycle or set aside for other industrial uses. All emissions and waste are treated in the plant. The percentages reported in the table are calculated according to the raw materials actually used during production

Use of raw materials per metre of Alcantara® product The company product portfolio includes a variant of the Alcantara® Multilayer product for Interior and Automotive seats, U.M. 2008 2009 25% of which is comprised of recycled raw materials. Liquid nitrogen SM3 1.651.775 1.577.186 Thermoplastic polymers Kg 1.845.300 1.295.100 Colourings and additional materials Kg 1.099.225 818.307 Packaging Kg 731.427 493.417 Textile supports Kg 685.674 712.416 Raw materials for polyurethane Kg 632.170 331.980 Bonding agents and dressings Kg 475.500 214.300 Additional materials for post treatment Kg 264.160 211.200 Solvents Kg 82.780 107.700 Sandpaper Kg 3.674 1.898 Steel Kg 270 272

The Alcantara S.p.A. production process involves the use of additional materials that are eliminated and recovered during the various phases of the process.

Two materials (sub products) are therefore produced during the process, introduced to the market and re-used as raw materials in other production processes by third parties, who thus obtain an equivalent net saving in raw materials: • Alcarene®: thermoplastic polymer for injection moulding; • Alcanol®: vinyl bonding agent for the paper industry. Production rejects from the various process phases, known as textile waste, are also used in other industrial sectors in place of virgin raw materials. 4.4 Energy requirements 4.5 Atmospheric emissions

The sales and administrative offices of the Milan premises use natural gas for heating and electricity for regular office The “Streamlined Life Cycle Assessment” analysis carried out in 2008 at the Nera Montoro plant to evaluate the activities, for air conditioning, and for the heating plant. impact of Alcantara® production on the environment showed that, in terms of the emission of substances that The Nera Montoro production plant employs: damage the ozone layer, the production process has practically zero impact. • natural gas for direct heating and steam production of 6 bar; 90 • steam from a 32 bar distribution network, powered by a cogeneration plant owned and managed by a third party. In 2009 Alcantara S.p.A. drafted its first Report on direct and indirect greenhouse gas (GHG) emissions in 91 Before being used in the production process, the steam is reduced to a pressure of 6 bar, generating electricity accordance with the directives of the UNI ISO 14064-1 standard. The content of the report, the data processed and 4 in the passage from turbine to back pressure; the calculation methods employed were certified by TÜV Italia. • electricity, mainly used for the production process, drawn in part from the Italian high voltage (132KV) electricity The operational boundaries for each premises (sales offices and plant) were defined for the purposes of the National network and in part turbine-generated by the reduction of steam pressure. Inventory Report of Greenhouse gas-GHG emissions according to the directive , with the decision to include all direct and indirect activities for the production and transportation of raw materials, the production and transport of Energy consumption the end product right through to the gates of the receivers during the subsequent processing phase. U.M. 2008 2009 Natural gas KWh 469.428 515.557 As regards the transport of raw materials, those activities carried out contractually under the responsibility of Milan Electricity KWh 484.584 525.533 Alcantara S.p.A. were calculated. The following phases were excluded however: Natural gas KWh 19.459.016 5.114.310 • “packaging” or production of customer product as this cannot be monitored; Acquired electricity KWh 36.313.331 31.210.250 • usage, rendered insignificant by its extremely modest environmental impact; Nera Montoro Self-produced electricity KWh 8.419.680 7.395.720 • end of life, given the multiple applications of the material. Steam KWh 189.419.000 152.807.419 Greenhouse gas emission flowchart: sales offices The reduction of energy requirements at Alcantara S.p.A. is a result of the continuous commitment to optimising production processes and equipment, a procedure which has entailed the following milestones: Indirect emissions • 1998-2002, the complete renewal of production equipment; Direct emissions • in 2000 the definition of a partnership with a local producer for the exclusive supply of cogeneration plant steam; Electricity Business trips • from 2008 the exclusive purchase of electricity from renewable sources. Methane gas consumption

Employee travel

Indirect emissions These excellent results were made possible by a series of measures that, in addition to that already reported Direct emissions as regards energy consumption, allowed for: Raw materials (production and transport) Transport end product • the maximization of separate waste collection; Consumo gas metano • the reduction of business trips by employees thanks to the installation of a videoconferencing system between 92 the two premises, with parent company Toray and customers and suppliers since 2000; 93 Electricity Transport and disposal of • the conversion of textile waste into raw materials for other industrial uses since 2006. waste 4

Between 2008 and 2009, reduced its CO2 eq emissions by 50%, through the adoption of electricity deriving exclusively Steam from renewable sources: 2008 ≈ 29.041 tonnes CO eq. Business trips 2 2009** = 14.481 tonnes CO2 eq.

∆ ≈ 14.560 tonnes CO2 eq. (- 49 % vs 2008). Employee travel Since 1993, there has been a gradual reduction of 79% in CO2 eq. emissions (internal estimate of 69,276 tonnes CO2 eq. for 1993):

1993 ≈ 69.276 tonnes CO2 eq.

2009** = 14.481 tonnes CO2 eq.

∆ ≈ 54.795 tonnes CO2 eq. (- 79 % vs 1993).

Elimination of Emissions Reuse of rejects and waste

Direct atmospheric emissions from abatement systems, with the exclusion of the CO2 produced by the consumption

of natural gas, do not contain polluting substances (NOx, SO2, Particulates).

Below are the summary GHG emission values, total and per single installation, certified by TÜV Italia, expressed in

tonnes of CO2 eq for the year 2009* and compared with the forecast data for 2008.

Summary GHG values in total and per installation - 2009 Alcantara S.p.A. Alcantara S.p.A. Nera Montoro Milan GHG Contribution Emission source organisation organisation production site premises (tonnes of CO eq) 2 2008 2009 installation (Terni) installation Direct emissions Natural gas 3972 1122 1019 103 Electricity 14848 12806 12594 212 Steam 115 104 104 Raw material production 16552 13698 13698 Indirect emissions Raw material transportation 4614 3227 3227 Transportation and waste disposal 54 192 192 * Direct emissions are calculated according to the methods of calculation defined in the procedure for the Emission Trading Transportation of finished products 376 211 211 Scheme. For information not directly available regarding indirect emissions, Sima Pro® software version 7.1.8 together with the Travelling to work premises 860 739 393 346 Ecoinvent V.2 database was used. Activities and processes that are thought to contribute to less than 2% of the environmental Alcarene® -5940 -4078 -4078 impact were excluded from the data inventory. For all specific data regarding the production of Alcantara®, those in the production inventory were used. Removal of Textile waste -1320 -2060 -2060 emissions Alcanol® -5090 -958 -958 Electricity acquired from renewable sources 0 -12806 -12594 -212 ** Please note: this data is referred to the period from July the 1st 2008 to June the 30th 2009. For effective consumption during year 2009 please refer to the previous chart TOTAL 189.058 29041 12197 11748 449 Sustainability and energy from renewable sources The table shows how in 2009, 97% of energy used by Alcantara S.p.A. came from renewable sources, meaning that The 1987 Brundtland Report defines Sustainable Development as “development that meets the needs of the present it does not contribute to the consumption of non-renewable sources. without compromising the ability of future generations to meet their own needs”. U.M. 2008 2009 94 In 1991 Herman Daly reduced the concept of sustainable development to three general conditions regarding the use Natural gas KWh 526.523 577.695 95 Milan of natural resources by man: Electricity KWh 484.584 525.533 4 1. the consumption rate of renewable resources is not higher than their recovery rate; Natural gas KWh 21.814.543 5.733.400 2. the emission of pollutants into the environment is within the absorption capacity of the environment; Acquired electricity KWh 36.313.331 31.210.250 Nera Montoro 3. the consumption rate of non-renewable resources is not higher than the rate of increase in renewable resource Self-generated electricity KWh 8.419.680 7.395.720 supply. Steam KWh 189.419.000 152.807.419

Alcantara S.p.A. has set itself two primary sustainability goals Total energy from renewable sources KWh 234.636.595 31.210.250 1) To become Carbon Neutral, quantifying, reducing and compensating all greenhouse gas emissions to zero. Total energy from non-renewable sources KWh 22.341.066 6.311.095 Total energy KWh 256.977.661 198.250.017 This is effective in conserving the environment and limiting the increase in the average temperature of the planet, which the IPCC (International Panel on Climate Change) attributes to the increase in concentrations Percentage energy from non-renewable sources % 8,69% 3,18% of greenhouse gases generated by man. Limiting the consumption of non-renewable sources, and oil and oil derivatives in particular, is crucial in protecting GLOBAL AVG TEMP 1880 - 2007 the needs of future generations. Indeed, according to various theories, the availability of crude oil will increase until it reaches a maximum peak, after Temp (F) which there will be a decline in resources and extraction will become more difficult. Pessimists say this peak has

58,0 already passed, whilst the most optimistic say it will take place midway through the century.

57,5

57,0

AVG Temp (F) 56,5 Linear (AVG Temp (F))

56,0 Year 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

2) To only use energy from renewable sources.

This contributes towards preventing the consumption of non-renewable sources (oil, natural gas) and therefore certainly has a positive impact on environmental sustainability, notwithstanding the theories on greenhouse gases. ALCANTARA S.p.A. IS CARBON NEUTRAL

Alcantara S.p.A. has long placed great emphasis on the responsible management of its business in full respect of people, the economic equilibrium, and the environment. It was a natural step for the company to embark on a sustainability drive aimed at renewing and highlighting existing certification and corporate “good practices”, 96 and continuously setting itself new improvement targets.

Alcantara S.p.A. is “Carbon Neutral”, meaning that it has measured and compensated 100% for all carbon dioxide emissions right throughout the entire Alcantara® material production process, from the cradle (including raw materials) to the gate (through to the delivery of the material to the customer).

All operations are certified by TÜV SÜD, a German certification body recognised at international level.

CERTIFICATION ATTAINMENT PROCESS

A mandatory step in achieving the goal of compensation is the quantification of emissions, carried out in accordance with the directives of the UNI ISO 14064-1 standard, which specifies the principles and requisites for planning, developing, managing and reporting GHG inventories at organisational or corporate level. The report on greenhouse gas emissions relative to the first year of the inventory was drafted with the specialist support of Ciba Expert Services and later certified by TÜV SÜD.

In the life cycle evaluation a “cradle to gate” analysis was carried out, adding all direct and indirect activities for the production and transport of raw materials, production, and the transport of the finished product right up to the gates of the receivers. Direct emissions (inside the installation) and indirect emissions (outside the installation) were evaluated for both premises. CARBON DIOXIDE COMPENSATION (July 2008-June 2009)

The compensation calculation is the following: In order to compensate for the CO2 emissions generated by the company, Alcantara S.p.A. funded three projects

(132.450 euro) which, under the auspices of the UN, contribute to improving the financial, social and environmental Honduras Hydroelectric Plant - 6.500 tonnes CO2 eq conditions of the planet. Located on three continents, the projects generate energy from renewable sources, which New Zealand Wind Energy Plant - 2.000 tonnes CO2 eq. is in line with our choice to exclusively use this form of energy for our activities. India Hydroelectric Plant - 6.000 tonnes CO2 eq.

The projects have enabled Alcantara S.p.A. to achieve total compensation of 14,500 tonnes of CO2 equivalent; given - 14.500 tonnes CO eq. that, on 20 June 2009, the company’s total residual emissions totalled 14,481 tonnes of CO2 equivalent, Total compensation 2 +14.481 tonnes CO eq. the Total Balance is 0 tonnes of CO2 equivalent. Total residual emissions 2

Total Balance 0 tonnes CO2 eq THE “BABILONIA” PROJECT, hydroelectric plant in Honduras

The “Babilonia” hydroelectric project is located in Babilonia In the future, the focus shall be placed on residual emissions (14,481 tonnes CO2 eq.), subdivided as such: river, in Olancho Department in Honduras. The main goal of the project is to generate electricity from Relative weight of co residual emissions renewable sources using hydroelectric resources. This 2 will contribute to achieving the objectives of sustainable development in Honduras, a country with plenty of natural resources. Others

Transport End Product

Home/Office transfers and business trips

THE “TE APITI” PROJECT, Transport Raw Materials wind energy plant in New Zealand The “Te Apiti” wind farm is located in the south of New Zealand’s North Island. The plant won the WWF Gold Natural Gas Standard award, a certification of the excellence of the project. The government of New Zealand ratified the Kyoto Production protocol in 2002, undertaking to progressively reduce its emissions and increase the use of energy from renewable Raw Materials (*) sources. 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0%

THE “VARAHI” PROJECT, hydroelectric plant in India The project aims to generate energy from the Varahi river, in the state of Karnataka in southern India, by building a hydroelectric plant. Without this plant, energy would be supplied through the national electricity grid, which is

mainly coal-based with high emissions of CO2. 4.6 Water requirements

The primary source of water for the industrial activities carried out at the Nera Montoro plant and Research centre is the River Nera. A small amount of consumption is taken directly, whilst the majority is supplied by a third party Company which also procures the water from the River Nera. Another source of water is the steam produced, which is returned to the supplier after condensation. The water is used for sanitary purposes, fire protection and irrigation, industrial use in the different production plants 101 and, more specifically, for colouring the end product. All wastewater is sent to an internal treatment plant. 4 At the production site there is just a single drainage point, duly authorised and monitored, downstream from the water treatment plant, which pours into the River Nera. Water discharge is analyzed bimonthly according to the Monitoring and Control plan (AIA) and all the analysis are sent to the competent authorities. Values are always far below the law limits.

Water supply by source U.M. 2008 2009 River Nera via TIC artificial reservoir m3 1,502,500 1,180,356 River Nera m3 188,000 0 wells m3 80,200 80,506 municipal waterworks m3 38,550 39,300 TOTAL withdrawn 1,809,250 1,291,362 Water drainage destination River Nera m3 1,735,940 1,363,008 4.7 Waste production

The waste produced during production activities mainly comprises residues (muds) deriving from the wastewater treatment plants. This non-harmful waste is transferred to the authorised landfill owned by the Company and located at its production site. 102 The table below outlines, by type and volume, the waste produced and disposed of at the Nera Montoro installation. 4103 Waste Produced Waste Description U.M. 2008 2009

Physiological processing waste from grinding Buffing powders Kg 434,000 313,349 procedure containing polyester and polyurethane

Fireproof fabric production waste, sub-products Dangerous containing impurities, empty containers that held Kg 335,266 626,258 dangerous substances

Non-dangerous Non-recoverable production waste, plastic, wood etc. Kg 688,852 2,057,408

Non-dangerous for internal landfill Water treatment mud Kg 3,721,000 3,122,460 TOTAL Kg 5,179,118 6,119,475

The majority of waste produced is not dangerous (84.65% in 2009). In recent years there have been no spills or contamination of the environment. 4.8 Environmental investments 4.9 Environmental education and other initiatives

Below the company’s investments in health, safety and the environment 2006-2009. In line with company health, safety and environmental policies, and in respect of legal directives, Alcantara S.p.A. provides its staff with continuous training and information. More specifically, in 2009 12,128 hours of training were HSE provided in the area of health, safety and the environment, 11,958 of which in the plant.

104 3.000.000 Health Below an outline on the health, safety and environmental training provided at the plant in the last three years. 105 Safety 4 2.500.000 Environment Nera Montoro Plant 2007 2008 2009 2.000.000 Safety and the environment 2,022 3,803 11,958

1.500.000 HSE projects - 2008 (Results and % implemented - status December 2008) December ‘09 1.000.000 120

500.000 100

80 2006 2007 2008 2009 60 Conservationist and improvement activities to reduce energy consumption are one of the Company’s key priorities. Below the Company’s investments to this end, 2006-2009. 40

Energy Saving 20  600.000,00 0 Safety Hygiene Environment Disaster prevent. Total projects 500.000,00  Total by type 35 20 33 30 118 Implemented 33 19 28 24 104 400.000,00 % 94% 95% 85% 80% 88%

300.000,00 Alcantara S.p.A.’s Health, Safety, Environmental and Disaster Prevention Plan for 2009 seeks to identify a series of projects, separated according to area and monthly activity, to improve health and safety in workplaces, increase 200.000,00 the protection of the internal and external environment, and prevent disasters. This commitment is divided by area of expertise and involves all Production Units and staff units. Every month the Units carry out a follow-up on the 100.000,00 performed activities, which are summarised in a single document that is presented during the monthly plant Health, Safety and Environment Committee meeting.

2006 2007 2008 2009

In 2009, Alcantara S.p.A. was not presented with any sanctions, of monetary nature or otherwise, for its failure to respect regulations and laws in the environmental sphere. G3 CONTENT CORRELATION TABLE

This year Alcantara S.p.A. has developed an accounting process and a number of indicators to reach level A in the ORGANIZATIONAL PROFILE application of the GRI (Global Reporting Initiative) standard; the Report has been audited by TÜV Italia. Section Indicator Status Page 2.1 Name of the organization. 9, 11 Application level c C+ b b+ a a+ 2.2 Primary brands, products, and/or services. 11 Report on: Report on all customers Same requisites as for level B 106 Operational structure of the organization, including main divisions, operating companies, subsidiaries, and 107 1.1 foreseen for EC on: 2.3 18 joint ventures. 2.1 - 2.10 1.2 Profile 3.1 - 3.8 - 3.10 - 3.12 3.9 - 3.13 2.4 Location of organization’s headquarters. 13 4.1 - 4.4 - 4.14 - 4.15 4.5 - 4.13 - 6.16 - 4.17 output Number of countries where the organization operates, and names of countries with either major operations or 2.5 13 that are specifically relevant to the sustainability issues covered in the report. lly lly lly a a a 2.6 Nature of ownership and legal form. 13 e rn rn rn c Not requested Notice on management Notice on management

te te te 2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries). 15, 64-66

x method for all indicator x method for all indicator x oti categories categories 2.8 Scale of the reporting organization 33

d n Management 2.9 Significant changes during the reporting period regarding size, structure, or ownership 9, 13 r method output

da 2.10 Awards received in the reporting period. 15 n ta t audited e t audited e t audited e s r r r REPORT PARAMETERS Report on a minimum of 10 Report on a minimum of 20 Report on all performance Section Indicator Status Page performance indicators, performance indicators, indicators as in G3 Repo Repo Repo including at least one of the including at least one of the and applicable sector Report Profile Performance following types of indicator: following types: economic, supplements as regards 3.1 Reporting period (e.g., fiscal/calendar year) for information provided. 9 indicators economic, social, and environmental, human rights, the principle of materiality,

output environmental work, society, product explain eventual omissions 3.2 Date of most recent previous report (if any) 9 responsibility 3.3 Reporting cycle (annual, biennial, etc.) 9 3.4 Contact point for questions regarding the report or its contents. 9 Report Scope and Boundary GRI CONTENT TABLE 3.5 Process for defining report content 9, 14 The following table makes it possible to identify the position of the information requested by the GRI-G3 standard, 3.6 Boundary of the report 9, 14 indicating the code corresponding to the indicator, the level of reporting, and the number of the page where the 3.7 State any specific limitations on the scope or boundary of the report. 9, 14 issue is dealt with. Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities 3.8 9, 14 that can significantly affect comparability from period to period and/or between organizations.

Data measurement techniques and the bases of calculations, including assumptions and techniques 3.9 9 legenda underlying estimations applied to the compilation of the Indicators and other information in the report. Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons 3.10 for such re-statement (e.g., mergers/ acquisitions, change of base years/periods, nature of business, 9 Completely reported measurement methods). Partially reported Significant changes from previous reporting periods in the scope, boundary, or measurement methods 3.11 9 n.r. Indicator of no relevance to Alcantara S.p.A. as it is not applicable applied in the report. GRI Content Index STRATEGY AND ANALYSIS 3.12 Table identifying the location of the Standard Disclosures in the report. 9, 106-112 Section Indicator Status Page Assurance

Statement from the most senior decision-maker of the organization (e.g., CEO, chair, or equivalent senior Policy and current practice with regard to seeking external assurance for the report. If not included in 1.1 7 the assurance report accompanying the sustainability report, explain the scope and basis of any external position) about the relevance of sustainability to the organization and its strategy. 3.13 9, 106-118 assurance provided. Also explain the relationship between the reporting organization and the assurance 1.2 Description of key impacts, risks, and opportunities. 29 provider(s). GOVERNANCE, COMMITMENTS AND ENGAGEMENT ECONOMIC Section Indicator Status Page Section Indicator Status Page Governance Economic performance

Governance structure of the organization, including committees under the highest governance body 4.1 16 Direct economic value generated and distributed, including revenues, operating costs, employee 108 responsible for specific tasks, such as setting strategy or organizational oversight. EC1 CORE compensation, donations and other community investments, retained earnings, and payments to 34-35 109 capital providers and governments. Indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their 4.2 16 function within the organization’s management and the reasons for this arrangement). Financial implications and other risks and opportunities for the organization’s activities due to EC2 CORE 91 climate change. For organizations that have a unitary board structure, state the number of members of the highest 4.3 16 governance body that are independent and/or non-executive members. EC3 CORE Coverage of the organization’s defined benefit plan obligations. 57

Mechanisms for shareholders and employees to provide recommendations or direction to the highest EC4 CORE Significant financial assistance received from government 35 4.4 17 governance body. Market presence Linkage between compensation for members of the highest governance body, senior managers, and Range of ratios of standard entry level wage compared to local minimum wage at significant 4.5 executives (including departure arrangements), and the organization’s performance (including social and 17 EC5 ADD 54 locations of operation. environmental performance). 4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. 17 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of EC6 CORE 41 operation. Process for determining the qualifications and expertise of the members of the highest governance body for 4.7 26 guiding the organization’s strategy on economic, environmental, and social topics. Procedures for local hiring and proportion of senior management hired from the local community EC7 CORE 49 at locations of significant operation. Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, 4.8 17, 25 environmental, and social performance and the status of their implementation. Indirect economic impacts

Development and impact of infrastructure investments and services provided primarily for public 35-36, Procedures of the highest governance body for overseeing the organization’s identification and management EC8 CORE 4.9 of economic, environmental, and social performance, including relevant risks and opportunities, and 21, 26 benefit through commercial, in-kind, or pro bono engagement. 77-79 adherence or compliance with internationally agreed standards, codes of conduct, and principles.

Processes for evaluating the highest governance body’s own performance, particularly with respect to 4.10 21 economic, environmental, and social performance.

Commitments to External Initiatives 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization. 9

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the 4.12 22 organization subscribes or endorses.

Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: Has positions in governance bodies; 4.13 79 Participates in projects or committees; -Provides substantive funding beyond routine membership dues; or -Views membership as strategic. Stakeholder Engagement 4.14 List of stakeholder groups engaged by the organization. 28-29 4.15 Basis for identification and selection of stakeholders with whom to engage. 28 4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. 28, 41

Key topics and concerns that have been raised through stakeholder engagement, and how the organization 4.17 28-29, 41 has responded to those key topics and concerns, including through its reporting. ENVIRONMENTAL LABOR PRACTICES AND DECENT WORK Section Indicator Status Page Section Indicator Status Page Materials Employment EN1 CORE Materials used by weight or volume. 88 LA1 CORE Total workforce by employment type, employment contract, and region. 49 110 EN2 CORE Percentage of materials used that are recycled input materials. 89 LA2 CORE Total number and rate of employee turnover by age group, gender, and region. 50 111 Energy Benefi ts provided to full-time employees that are not provided to temporary or part-time LA3 ADD 62 EN3 CORE Direct energy consumption by primary energy source. 90 employees, by major operations. EN4 CORE Indirect energy consumption by primary source. 90 Labor/Management Relations EN5 ADD Energy saved due to conservation and efficiency improvements 90 LA4 CORE Percentage of employees covered by collective bargaining agreements. 56

Initiatives to provide energy-efficient or renewable energy based products and services, and 22, 27, 75, Minimum notice period(s) regarding operational changes, including whether it is specified in EN6 ADD LA5 CORE 56 reductions in energy requirements as a result of these initiatives. 90 collective agreements.

EN7 ADD Initiatives to reduce indirect energy consumption and reductions achieved. 90 Occupational Health and Safety

Water Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related LA7 CORE 15, 60 EN8 CORE Total water withdrawal by source. 101 fatalities by region.

EN9 ADD Water sources significantly affected by withdrawal of water. 101 Education, training, counselling, prevention, and risk-control programs in place to assist workforce LA8 CORE 61 Biodiversity members, their families, or community members regarding serious diseases.

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of LA9 ADD Health and safety topics covered in formal agreements with trade unions. 56 EN11 CORE n.r. – high biodiversity value outside protected areas. Training and Education

Description of significant impacts of activities, products, and services on biodiversity in protected LA10 CORE Average hours of training per year per employee by employee category. 56 EN12 CORE n.r. – areas and areas of high biodiversity value outside protected areas. Programs for skills management and lifelong learning that support the continued employability of LA11 ADD 55 Emissions, Effluents, and Waste employees and assist them in managing career endings. EN16 CORE Total direct and indirect greenhouse gas emissions by weight. 92 LA12 ADD Percentage of employees receiving regular performance and career development reviews. 52, 54 EN17 CORE Other relevant indirect greenhouse gas emissions by weight. 92 Diversity and Equal Opportunities

EN18 ADD Initiatives to reduce greenhouse gas emissions and reductions achieved. 93 Composition of governance bodies and breakdown of employees per category according to LA13 CORE 50-52 EN19 CORE Emissions of ozone-depleting substances by weight. 92 gender, age group, minority group membership, and other indicators of diversity. EN20 CORE NOx, SOx, and other significant air emissions by type and weight. 92 LA14 CORE Ratio of basic salary of men to women by employee category. 54 EN21 CORE Total water discharge by quality and destination. 101 EN22 CORE Total weight of waste by type and disposal method. 102 EN23 CORE Total number and volume of significant spills. 102 Products and Services

Initiatives to mitigate environmental impacts of products and services, and extent of impact EN26 CORE 93, 98 mitigation.

EN27 CORE Percentage of products sold and their packaging materials that are reclaimed by category. 88, 89 Compliance

Monetary value of significant fines and total number of non-monetary sanctions for EN28 CORE 104 non-compliance with environmental laws and regulations.

Transport

Significant environmental impacts of transporting products and other goods and materials used EN29 ADD 91 for the organization’s operations, and transporting members of the workforce. HUMAN RIGHTS PRODUCT Section Indicator Status Page Section Indicator Status Page Investment and Procurement Practices Customer Health and Safety Life cycle stages in which health and safety impacts of products and services are assessed for Percentage and total number of significant investment agreements that include human rights HR1 CORE 38 PR1 CORE improvement, and percentage of significant products and services categories subject to such 67 clauses or that have undergone human rights screening. 112 procedures. 113 Percentage of significant suppliers and contractors that have undergone screening on human Total number of incidents of non-compliance with regulations and voluntary codes concerning HR2 CORE 40-41 PR2 ADD 67 rights and actions taken. health and safety impacts of products and services during their life cycle, by type of outcomes.

Total hours of employee training on policies and procedures concerning aspects of human rights Product and Service Labelling HR3 ADD 51 that are relevant to operations, including the percentage of employees trained. Type of product and service information required by procedures, and percentage of significant PR3 CORE 67 Non-Discrimination products and services subject to such information requirements.

HR4 CORE Total number of incidents of discrimination and actions taken. 52 Total number of incidents of non-compliance with regulations and voluntary codes concerning PR4 ADD 67 Freedom of Association and Collective Bargaining product and service information and labelling, by type of outcomes.

Operations identified in which the right to exercise freedom of association and collective Practices related to customer satisfaction, including results of surveys measuring customer HR5 CORE 56 PR5 ADD 67-70 bargaining may be at significant risk, and actions taken to support these rights. satisfaction.

Child Labour Marketing Communications

Operations identified as having significant risk for incidents of child labour, and measures taken to Programs for adherence to laws, standards, and voluntary codes related to marketing HR6 CORE 52 PR6 CORE 70-74 contribute to the elimination of child labour. communications, including advertising, promotion, and sponsorship.

Forced and Compulsory Labour Customer Privacy

Operations identified as having significant risk for incidents of forced or compulsory labour, and Total number of substantiated complaints regarding breaches of customer privacy and losses of HR7 CORE 52 PR8 ADD 70 measures to contribute to the elimination of forced or compulsory labour. customer data.

Compliance

SOCIETY Monetary value of significant fines for non-compliance with laws and regulations concerning the PR9 CORE 70 Section Indicator Status Page provision and use of products and services. Community

Nature, scope, and effectiveness of any programs and practices that assess and manage the SO1 CORE 29, 77-79 impacts of operations on communities, including entering, operating, and exiting.

Corruption SO2 CORE Percentage and total number of business units analyzed for risks related to corruption. 17 SO3 CORE Percentage of employees trained in organization’s anti-corruption policies and procedures. 17 SO4 CORE Actions taken in response to incidents of corruption. 17 Public Policy SO5 CORE Public policy positions and participation in public policy development and lobbying. 77, 79 Compliance

Monetary value of significant fines and total number of non-monetary sanctions for SO8 CORE 70 non-compliance with laws and regulations. 114 115 116 118 119