ANNUAL SUSTAINABILITY 2020 REPORT 2020 2020 CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION IN ACCORDANCE WITH LEGISLATIVE DECREE NO. 254/2016 ANNUAL SUSTAINABILITY REPORT REPORT SUSTAINABILITY ANNUAL brembo.com brembo.com 16 ANNUAL SUSTAINABILITY REPORT 2020 2020 CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION IN ACCORDANCE WITH LEGISLATIVE DECREE NO. 254/2016 RELAZIONE FINANZIARIA ANNUALE 2020 It’s the visionary look of those who are transforming their A careful look intuition into a future scenario. Aware of the key role of sustainability, digitalisation at evolution and globalisation in the profound evolution of the automotive industry. 2 RELAZIONEANNUAL FINANZIARIA SUSTAINABILITY ANNUALE REPORT 2020 2020 It’s the visionary look of those who are transforming their A careful look intuition into a future scenario. Aware of the key role of sustainability, digitalisation at evolution and globalisation in the profound evolution of the automotive industry. 2 3 Contents Letter of the Chief Corporate Social Responsibility Officer 6 Brembo Purpose 8 Sustainability Highlights 10 A culture of sustainability: “We support SDGs” 14 COVID-19: the Group’s answer 18 1. The Group 24 1.1 Group profile and main applications 24 1.2 Brembo’s History 26 1.3 Global Footprint 28 1.4 Target markets and brands 30 1.5 Stock Performance 36 1.6 Sustainable finance: instruments adopted by the Group 37 2. Sustainability 40 2.1 Sustainability for Brembo 40 2.2 The Group’s values 43 2.3 The history of CSR 44 2.4 Dialogue with stakeholders 50 2.5 The materiality matrix 59 2.6 The 2030 Agenda: sustainable development objectives and priorities for Brembo 65 3. Organisational structure 70 3.1 Corporate Governance Model 70 3.2 Responsible business management system 82 3.3 Fiscal responsibility 90 3.4 Internal Control and Risk Management System 91 4. Brembo People 100 4.1 Group that grows with talented people 100 4.2 Different ways of being Brembo People 106 4.3 Training and development of skills 109 4.4 Professional growth through recognition of merit 113 4.5 Safeguarding workers’ health and wellbeing 114 4 ANNUAL SUSTAINABILITY REPORT 2020 Contents 5. The Supply Chain 126 5.1 Ancillary companies and supplier network 126 5.2 Promoting sustainable business models through responsible purchasing practices 128 6. Production Process 134 6.1 Designing innovation 134 6.2 Partnerships to improve the environmental impact of products 136 6.3 The results of innovation 138 6.4 Listening to customers for product improvement 144 6.5 Creativity and method: ensuring product safety 147 6.6 Awards for innovative ideas of employees 152 7. Environment 156 7.1 Efficiency and environmental protection in production processes 156 7.2 System for the effective management of environmental impact (ISO 14001) 159 7.3 Energy consumption 160 7.4 Greenhouse gas emissions 162 7.5 Atmospheric polluting emissions 165 7.6 Management and use of water resources 165 7.7 Waste reduction 168 8. Local areas 172 8.1 Creating opportunities for local areas 172 8.2 Social and cultural development of local communities 175 Appendix 184 Methodological note 194 Reporting standards applied 194 Reporting scope 194 Reporting process 195 Material topics and related GRI aspects 197 GRI table of contents 198 SASB and WEF Indicators 207 Independent Auditors’ Report on the Consolidated Disclosure of Non-Financial Information in accordance with Article 3, par. 10, of Legislative Decree No. 254/2016 and with Article 5 of Consob Regulation No. 20267 209 5 Letter of the Chief Corporate Social Responsibility Officer Letter of the Chief Corporate Social Responsibility Officer Dear Stakeholders, I am pleased to present the 2020 Consolidated Non-Financial Statement, the document in which the Brembo Group reports on its objectives, activities and results in the field of sustainability and social responsibility, in order to share them with you, colleagues, shareholders, customers, suppliers and communities in all the territories in which it operates. The document has been prepared in accordance with the guidelines of the Global Reporting Initiative (GRI Standard) and, starting from this report, taking into consideration a number of World Economic Forum (WEF) indicators. In Brembo we are convinced that the dialogue with our stakeholders is an essential condition for planning and acting in every context in an informed manner. The annual materiality analysis process carried out each year is aimed at identifying the areas in which Group activities may have the greatest impact on natural ecosystems, as well as on the wellbeing of the communities, individuals and all of Chief CSR Officer its stakeholders. For this reason, in 2020 we expanded the set of stakeholders involved in defining Cristina Bombassei the topics included in the materiality matrix, increasing the number of customers and suppliers and introducing trade associations and insurance companies, whose contribution will help us guide our choices and improve the impacts of our activities. In this context, we care particularly about the management of ESG risks, namely those relating to sustainability issues, which must be tackled adopting an integrated and structured approach. This year as well, we are continuing with our commitment to help achieve the 17 Sustainable Development Goals defined in the UN 2030 Agenda. Brembo is taking concrete actions to achieve increasingly more responsible production, pursuing a reduction in emissions to ensure the health of the community and helping to mitigate climate change through ever more ‘green’ technological solutions. Furthermore, the purpose of the “We support SDGs” information campaign, aimed at all employees, is to make these objectives known and promote the tangible actions that each person can take to achieve them. A year after the campaign’s launch, 2020 saw the scrutiny of nine of Agenda 2030 goals, from defeating poverty to combating climate change, and the sharing of as many corporate projects. The challenge is to meet the 17 SDGs, continuously engaging in the promotion of concrete initiatives. Employees represent our Group’s true inestimable wealth of experience, passion and skills. To date, there are more than 11,000 people who, with their work, contribute to the Company’s development, operating in 14 countries on three continents in 19 production sites, 6 sales offices and 5 research and development centres. In a constantly changing world, Brembo offers them valuable opportunities for professional growth, as well as a stimulating and rewarding work environment and a rich and continual training offer in which we have continued to invest with determination. The supply chain is also a cornerstone for Brembo, not only as regards the business. We are convinced that it is only shared commitment that can lead to real progress: for this reason we are spreading the sustainability culture also amongst our suppliers who, accompanying us in the process of continual innovation and quality improvement, are required to operate in a context of social responsibility and respect essential issues such as human rights and protection against child labour, as well as specific issues such as “conflict minerals”. Sustainability is a way of thinking that also takes concrete shape in Research & Development and for Brembo translates into designing and producing brake systems that help reduce CO2 emissions and particulates. These are the principles that, in 2020, led to the launch of the Greentive® disc and 6 ANNUAL SUSTAINABILITY REPORT 2020 Letter of the Chief Corporate Social Responsibility Officer Enesys® brake spring, solutions that help reduce consumption, increasing the vehicle’s general efficiency. In an automotive industry that is increasingly electrification-oriented, we are working on the Brake by Wire electric brake, a real revolution for road cars, and not only electric ones. Electrification, digitalisation and autonomous driving are the unprecedented challenges that the automotive industry is facing, as well as trends that have a significant impact on the environment. Brembo wants to lead the way in this process and in 2020 presented a new vision, Turning Energy into Inspiration, outlining a new mission — to become a Solution provider to support our customers in anticipating these macro trends, developing ever more sustainable solutions. There is an ambitious target on the horizon: to become carbon neutral, in other words to reduce CO2 emissions to zero by 2040. In five years, we have cut our total emissions by almost 45% thanks to energy efficiency projects and a constant increase in the use of renewable energy, which in some plants reaches 100% of the sources used. On the resources front, we are promoting the reduction of water consumption in production processes and the development of solutions for the reuse of water. We recycle waste materials, aiming to maximise their salvage, and we reduce the production of waste and consumption of natural and energy resources as far as possible. We are proud that our commitment is acknowledged and recognised also by the international community. In fact, for the third year running the CDP (formerly the Carbon Disclosure Project), a global non-profit organisation that supports companies in measuring and managing climate change information, awarded Brembo the maximum rating, represented by a double A: the first company to have shown its worldwide leadership through proven, meaningful and transparent action in terms of climate change, the second as regards water resource risk management.