SUSTAINABILITY PUBLISHED IN MAY 2021 PASSION IN SUSTAINABLE BUSINESS AND TRUST IN OUR ABILITIES. 3 Table of contents Letter to stakeholder 7 6. Agrati’s people 56 Being an Agrati employee 56 The Agrati way: The new ERM & Sustainability Function 8 Occupational Health and Safety 58 Welfare and diversity 62 The challenge for the future 10 Agrati University: ‘We learn by doing’ 64 Talent attraction and retention 67 1. The Agrati Group 16 Profile and Business Activities 16 7. Environmental Sustainability 70 Agrati History 20 Resource Conservation 73 Mission, Vision and Values of Agrati 25 2021- 2025 Vision 73 Energy efficiency and emissions 76 2. Sustainability in Agrati 28 Agrati’s Emissions 78 The approach to Sustainability 28 Waste management 80 Stakeholder engagement 31 Soil defence 80 Materiality Analysis 33 8. Product Excellence and Innovation 84 3. Governance 38 Constant attention to customer needs 84 Sustainable Corporate governance 38 Product’s quality and security 86 Risk management 38 Be a global partner: complete support for the customers 89 Strategic Approach and Management 42 Agrati’s strength: continuous innovation 94 Board of Directors 42 Board of Statutory Auditors 43 9. Responsible Value Chain 102 Supplier management policy 106 4. Responsible Business Management 46 Responsible supply chain management: Agrati business ethics and integrity 46 supplier performance monitoring and evaluation 108 The Organization, Management and Control Model 231 47 Agrati Policies 48 Appendix 110 Management systems 49 Information and data security 49 Methodological Note 117 Reporting standard, scope and process 117 5. Economic performance: creation and distribution of the economic value generated 52 Reporting principles 119 Tax Transparency 53 Definition of material topics 120 Material topics and related GRI Standards 122 GRI Table of contents 124 4 SUSTAINABILITY REPORT 2020 Agrati 5 Letter to stakeholder Dear Stakeholders, suppliers through an effective operations management and regular the year 2020 brought an array of new challenges: the global audits. scenario has been characterized by the spread of COVID-19 with a tremendous impact both on people and industries. Lastly, concerning our governance, we believe that a strong corpora- Agrati put the highest priority in implementing prompt measures, as te governance translates in understanding the risks factors and com- detailed in this document, to guarantee the safety of its employees municating transparently how we manage and reduce them in order and to face the emerged situation. ensure a long-term sustainable competitive advantage. Still, it is with great pride that I present the Agrati Group Sustaina- We believe that through our passion in doing sustainable business bility Report in its second edition aligned with the recognised GRI and by trusting our abilities, we build a better future every day. Standards and in accordance with the EU Directive on disclosure of non-financial information (2014/95/EU), transposed in Italy by the Legislative Decree no. 254 of December 30, 2016, which will be pu- blished together with the yearly consolidated financial statements. Indeed, the purpose of this document is to explain what running a sustainable business means for us from an environmental, economic and social perspective. We are glad to provide a document that ga- thers forward-looking ideas, promotes collaboration and illustrates encouraging changes. Recognizing the impact of our business acti- vities, we decided to adopt an outward-looking view in reporting our Cesare Agrati performance, standing by our corporate values that are an expression The Chairman of our sustainability strategy. The information in this report represents a concrete response to the increased attention from all of our stakeholders regarding our su- stainability strategy and our ability to comply with national and in- ternational legislation. None of what is recounted in the following pages would have been achievable without the passion of those wor- king together, day after day, for the continuous improvement and the long-term sustainability of our productive organization. Our team philosophy entails being equipped with an articulated framework of resources, energy, competences, ideas, vision and solutions that – if integrated – assure the vital nourishment necessary for our growth. We are fully aware that sustainability is an essential value that will accompany our growth. Therefore, we are committed to minimizing externalities, reducing consumption of energy, water and other re- sources while reducing emissions, waste and pollution, at the same time reducing costs and improving profitability. Hence, increasing the efficiency of our operations becomes a fundamental factor in our suc- cess. At the same time, we want to protect our consumers by ensu- ring product safety while keeping our employees safe. Given the im- portance of our employees, we continue to adopt recruiting methods focusing on universities and social media platforms to attract and retain talents and we actively promote good relations between the Group and its greatest assets. Conscious of the potential impact of our operations on the environ- ment throughout the supply chain, the Group continues to engage its 6 SUSTAINABILITY REPORT 2020 Agrati 7 The Agrati way: The new ERM & Sustainability Function The Sustainability Team: In light of the clear current global trends, and recognizing its responsibility as an economic actor, Agrati has chosen to adopt sustainability as a guiding pillar in its business model and approach. Andrea Costantini The impacts of Agrati both on social and environmental sustainabi- Executive Vice-president lity are clear and on this front the Group wants to turn them into an opportunity to rethink its strategy and shift towards a long term value Project responsible creation approach. At the base of the Group’s actions towards sustainability, is the creation, in 2020 of the ERM & Sustainability function. The main goals of this function are: Julien Errera • Developing a Carbon and Climate Strategy to direct the group’s Group APS Leader & HSE Manager vision towards Carbon Neutrality and a shift towards serving the vehicle electrification market; Responsible of HSQE data manager and production contact person • Innovation through the lens of circular economy principles; • Implementation of a Responsible Supply Chain Model; • Implementation of an Enterprise Risk Management (ERM) model which integrates, within in it, all ESG risks, impacts and oppor tunities in order to holistically incorporate Sustainability aspects Gianluca Bella in strategic and operational processes; Group Human Resources Director • Reinforcement of the control system through an internal audit plan defined through a risk-based approach and extended to ESG Responsible for social data and policies issues as well. Leading and carrying forward this important project is a strong go- vernance team lead by Andrea Costantini, Executive Vice President in charge of coordinating: Strategy & Planning, Risk Management and Francesco Arlati Group General Counsel Sustainability and a coordination team which regularly reports the results of the project to the Board of Directors. Supporting him is a Responsible for governance and anti-corruption data dedicated team specialized in Sustainability, Risk Management, Envi- ronment Health & Safety, Legal Affairs and Internal Audit. With these ambitious plans Agrati aims to confirm its place as a forward looking leader within its sector, leading the way in the Marco Zanfrini integration of sustainability within business models. Senior Internal Auditor PMO assistance 8 SUSTAINABILITY REPORT 2020 Agrati 9 pandemic situation made it necessary. for intensive care units. On the 4th of May, after a period of reduced production, the Italian This virus has affected communities on multiple continents. The challenge for the future plants were authorized to start the whole production system directed Thousands of health professionals are heroically battling the virus, to all their clients, not only the essential ones, automotive included. putting their own lives at risk. To further manage the delicate situation, aligned with trade unions, The ongoing vaccination campaign is a decisive positive step forward Agrati adopted a Covid-19 risk management procedure, compliant in the emergency, spreading the hope of coming back to “normality”. with the “Protocollo di regolamentazione delle misure per il contrasto Italy and the rest of Europe will need time and help to return to a e il contenimento della diffusione del virus Covid-19 negli ambienti di semblance of normalcy. The World Economic Forum, in its annual Global Risk Report, Coordinating effective international action to tackle these sustainability lavoro” issued by the italian Government. Any protracted health emergency could affect, even significantly, the presents the top risks and trends facing the world. In the latest challenges is a fundamental aspect in determining success. The Some of the actions undertaken were the temperature measurement Group’s activities, strategies and prospects. publication the following risk were highlighted as the most likely two main international actions have been the introduction of the for all people entering the plants, protocols implementation At this point, there is no doubt on the tie interconnection between and impactful: Infectious disease, Climate action failure, Extreme Sustainable Development Goals (SDGs) and the Paris Agreement. to guarantee interpersonal