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>> Annual Report 2007 Sustainability Section extract from extract from 2007 Sustainability Section >> Introduction External Stakeholders Internal Stakeholders Auditors’ report Summary Chairman’s Letter 2 Introduction References 4 Charters, Codes and Values 5 Reporting and Planning 7 Results and Acknowledgements 8 Financial data and added value 11 Strategy 12 2008 Objectives 13 Hot Topics 14 Stakeholder Involvement 15 External Customers 17 Stakeholders Suppliers 25 Competitors 29 Institutions 32 The Environment 35 The Community 46 Internal Human Resources 53 Stakeholders Shareholders 66 Auditors’ report Auditors’ report (Ernst & Young) 86 Sustainability Section » Summary 1 Introduction External Stakeholders Internal Stakeholders Auditors’ report Chairman’s Letter When I became the chairman of Telecom Italia at the end of 2007, I was very impressed with the wealth of professionalism, motivation and technological competence I found in the Group. I was already aware of that, but not up to the level I experienced. I also found it reassuring the deep-rooted culture of transparency and integrity. Such culture does not imbue just the system of rules and procedures governing business management, decision-making and dialogue with the market. More generally it imbues all the relations with the stakeholders interacting with the Group in its business activities. This obviously stems not only from ethical or reputational reasons, but from the awareness that the creation of value is sustainable in time if we are able to effectively integrate the expectations of the context in which we operate, while pursuing our economic goals. I see this awareness expressed in strategies and facts. Let’s consider the environment. We are living in a period of many growing concerns about climate change, depletion of natural resources, and increasing prices of energy supply. We are aware of the fact that telecommunication services may considerably contribute to the elimination or containment of greenhouse gases emissions. Videoconferences, telework, infomobility services, telemedicine are but a few among the solutions offered by new technologies, permitting to rationalize and reduce transfers of people and goods and the related emissions. We are also aware, however, that these services absorb energy. The more they are used the more traffic on networks increases and the curve of consumptions shoots up, unless we strive to achieve an ever higher level of efficiency. Telecom Italia is doing this. In 2007 our eco-efficiency, measured as the ratio between traffic units and energy consumed, showed further improvement. We are currently experimenting with several solutions for the use of alternative energy sources, ranging from cogeneration to photovoltaic plants, wind farms and fuel cells. The first results are rather interesting, as are the ones coming from interventions on heating systems, on corporate car fleet (also involving significant reductions of emissions) and on the handling of technological waste produced by telecommunication activities. Sustainability Section » Chairman’s Letter 2 Introduction External Stakeholders Internal Stakeholders Auditors’ report Conducting energy and environmental efficiency pays: it is good both for the planet and for businesses. You could say it is twice as good for businesses: not only for the economic fall-out effects but also as an incentive to technological innovation. A sustainable company is a more innovative and competitive company. The financial market recognizes and rewards it. We are greatly satisfied with the inclusion, also in 2007, in the most important sustainability indexes, both at national and international level, and with the inclusion in the group of 20 companies most often selected at European level by “Green Social and Ethical” funds. I mentioned the environment, but I could just as well recall the great effort made by the Group to significantly reduce the digital divide in Italy. In Telecom Italia the concept of sustainability is wide-ranging and involves many applications, as the following pages illustrate with a wealth of detail, data and quantitative targets on which the Group wants to be evaluated in a transparent way. Transparency is one of the main goals of the Alliance, launched in March 2006 by the European Commission, companies and stakeholder representatives, in order to make Europe a pole of excellence in the field of Corporate Social Responsibility. Telecom Italia is going to give special support to this initiative also in 2008. We mean to continue on this same path: doing business in a sustainable way and create value are as a whole. Starting from this standpoint we confirm our commitment to support and spread the values and principles of the Global Compact, the initiative originated under the aegis of UN to promote the respect of human rights and working standards, to safeguard the environment and to fight corruption. We have the honour to be among the protagonists in a sector, such as telecommunications, having a key role in the economic and social development. This honour involves many responsibilities, which we don’t consider as a burden but rather as an incentive to do better and better. And this is for everybody, and for the world which we would like our children to inherit in even better conditions than the world we’ve found. Gabriele Galateri di Genola Chairman Sustainability Section » Chairman’s Letter 3 Introduction External Stakeholders Internal Stakeholders Auditors’ report Introduction For the past eleven years the Telecom Italia Group has been analysing its own performance towards the stakeholders on which the Group depends and, at the same time, influences by its own activities: Customers, Suppliers, Competitors, Institutions, the Environment, the Community, Human Resources, Shareholders. The Sustainability Section is included in the Annual Report, thus confirming the intention of the Group to present its financial performance together with the non-financial one. Ī References In defining and implementing Sustainability strategies and programs, the Telecom Italia Group refers to the guidelines issued by the most important world organisations for strategy and standardisation on Corporate Responsibility, particularly by UN Agencies and Programs for Environment and Human Rights and by OECD (Organisation for Economic Co-operation and Development). Since 2002 Telecom Italia has adhered to the principles set out by the Global Compact, the most important initiative at world level, launched in 2000 by UN to promote environment conservation, respect of human rights and labour standards, and anti-corruption practices. The following table shows the paragraphs and the pages whose contents directly or indirectly refer to the Global Compact’s principles and to the related GRI’s (Global Reporting Initiative) indicators. During 2007, the Group has adopted the G3 Sustainability Reporting Guidelines, in particular with reference to the materiality, inclusiveness and completeness principles. As far as the GRI Application Levels defined in G3 Guidelines, the TI Group sustainability report currently ranks at Level B+, as confirmed by GRI. Relevant actions to attain Level A+ have been undertaken. Global Compact Principle Relevant Paragraph related Page GRI Indicators to the GC Principle number 01. Businesses should support HR1-7, LA4, LA7-9, References, Results and 4, 8, 12, and respect the protection of LA13, PR1, PR8 Acknowledgements, Strategy, 13, 15, 25, internationally proclaimed human 2008 Objectives, Stakeholder 35, 46, 53 rights. Involvement, Suppliers, The Environment, The Community, Human Resources 02. Businesses should make sure HR1-7 2008 Objectives, Hot Topics, 13, 14, 25, that they are not complicit in Suppliers, Human Resources 53 human rights abuses. 03. Businesses should uphold the HR1-3, HR5, LA4-5 Human Resources 53 freedom of association and the effective recognition of the right to collective bargaining. 04. Businesses should uphold the HR1-3, HR7 2008 Objectives, Suppliers, 13, 25, 53 elimination of all forms of forced Human Resources and compulsory labour. Sustainability Section » Introduction » References 4 Introduction External Stakeholders Internal Stakeholders Auditors’ report 05. Businesses should uphold the HR1-3, HR6 2008 Objectives, Suppliers, 13, 25, 53 effective abolition of child labour. Human Resources 06. Businesses should uphold the HR1-4, LA2, LA13 2008 Objectives, Hot Topics, 13, 14, 15, elimination of discrimination in Stakeholder Involvement, 25, 53 respect of employment and Suppliers, Human Resources occupation. 07. Businesses should support a EC2, EN18, EN26, EN30 2008 Objectives, Hot Topics, 13, 14, 15, precautionary approach to Stakeholder Involvement, 25, 35 environmental challenges. Suppliers, The Environment 08. Businesses should undertake EN1-5, EN8, EN16-17, Results and 8, 13, 15, initiatives to promote greater EN20, EN22-23, Acknowledgements, 25, 35 environmental responsibility. EN26-27, EN30, PR3 2008 Objectives, Stakeholder Involvement, Suppliers, The Environment 09. Businesses should encourage EN5-7, EN18, EN26-27, Hot Topics, The Environment, 14, 35, 46 the development and diffusion EN30 The Community of environmentally friendly technologies. 10. Businesses should work against SO2–4 Charters, Codes and Values, 13, 5, 25, 66 corruption in all its forms, 2008 Objectives, Suppliers, including extortion and bribery. Shareholders Further information on “Core” indicators (GRI, G3) is available on the website www.telecomitalia.it, Sustainability

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