One of the elements characterising 2017 was undoubtedly growing awareness that technological innovation – like digitalisation, Big Data and Industry 4.0 – will have an ever greater influence on people’s lives, and the consequent growing attention given to this aspect by the Group, in procurement, pro- duction and distribution. 5 · Energy efficiency LETTER TO STAKEHOLDERS · Management of greenhouse gas emissions · Protection of water resources · Protection of forest resources 7 · Biodiversity GROUP PROFILE · Waste management Sofidel Group in figures · Ecological products Mission and vision · The organization’s environmental management INDEX Culture, ethics and values 79 13 PEOPLE SIGNIFICANT EVENTS Management of human capital DURING THE YEAR Company well-being Staff composition and distribution 19 Types of contract OUR IDEA OF SUSTAINABILITY Personnel characteristics Turnover Strategy and corporate responsibility governance Human rights, protected categories and equal opportunities · Sustainability strategy Pay and incentives · Main inspirations of the Group sustainability model Training and professional development · Our main sustainability partners Health and safety Materiality analysis and dialogue with stakeholders Industrial relations · Key stakeholders · Methods of engagement 99 · Materiality analysis · Initiatives to promote dialogue with stakeholders MARKETS AND CORPORATE BRANDS Strategy and business model 33 · Strategy for value creation GROUP ECONOMIC AND FINANCIAL · Key elements of the model and flow diagram PERFORMANCE · Internationalisation strategy in Europe and the United States 2017 Highlights · Distinctive factors Significant post balance sheet events · Outlook and strategic objectives Outlook for Group economic and financial performance · Innovation in the Sofidel Group Economic and financial performance · Sofidel’s strategy within the Circular Economy Investments Markets and customers Calculation and distribution of global added value · Group companies · Lines of business and markets 43 · The Sofidelshop E-Commerce portal PRODUCT · Service quality · Management of complaints Tissue production process Suppliers and the supply chain Product quality and safety · Type and volume of purchases · Product quality · Supplier qualification, selection and assessment · Product safety · New challenges Community 49 · Community relations OPERATIONS · Investments to benefit local communities Governance 129 · Company structure · Organizational structure APPENDIX · Internal control system Reporting process Risk management and monitoring Report boundary Management systems Assurance Respect for the environment GRI performance indicators 4 2017 INTEGRATED REPORT LETTER TO STAKEHOLDERS 5 2017 was an important year in many respects. LETTER TO STAKEHOLDERS In various areas of the world, after the long years of crisis, the macroeconomic data revealed a strengthening recovery and the election season involving many countries where Sofi del operates (including the United States, France, Great Britain and THE FUTURE IS NOW Germany) came to an end. Within this general context Sofi del continued to pursue its development policy with, among other things, the activation of new and more modern converting lines, the introduction of new paper mill capacity and the launch of a new growth phase for the Regina brand. Specifi cally, the year saw a tripling of paper mill production capacity at the Ciechanów plant, in Poland, the start-up of new converting lines at Buñuel, in Spain (where new paper mill production capacity will be activated by the last quarter of 2018, tripling current production) and the assembly of converting plant and paper mill machinery at Circleville, in Ohio, in what will be the biggest and most modern plant in the Group. In parallel, the Regina brand has been renewed and strengthened with a new, more coherent pan-European positioning and ...with a clear approach, aware that it stands the launch, for the fi rst time, of a common advertising campaign, planned in several countries (United Kingdom, Eire, Italy and Poland), while in the United States Sofi del has established important contacts to ensure the growth of its market presence on the threshold of a new era, rich in chal- in the coming months. Within this positive scenario, the year was, however, also marked by less favourable economic events that had a negative impact on Group trends. These included the signifi cant increase in the cost of the main raw material (cellulose), which made lenges and opportunities, which must be achieving our margins much more of a challenge, and the weakening of the pound which caused a contraction – given the importance of the UK market to the Group – in terms of consolidation of the UK results. identifi ed and faced together with its stake- One of the elements characterising 2017 was undoubtedly growing awareness that technological innovation – like digitalisa- tion, Big Data and Industry 4.0 – will have an ever greater infl uence on people’s lives, and the consequent growing attention holders, to continue to create shared value given to this aspect by the Group, in procurement, production and distribution. At the social level, in particular within the Eu- ropean context, the phenomenon of transmigration made its fi rst defi nitive entry onto the public agenda 2017, fuelled by the rapid growth in the number of inhabitants sharing the planet and the movement of large numbers of people from developing all along the value creation chain. countries or war zones to the more developed countries. A development which places the problem of integrating these fl ows, which may in part also represent a new work force and a new source of demand, at the top of today’s agenda. The future is now! This is the context within which Sofi del is looking to the future. And, with its vision focused on sustainable and responsible growth, it does so with the UN 2030 Agenda and its “17 Sustainable Development Goals” as its reference point. With a clear approach, aware that it stands on the threshold of a new era, rich in challenges and opportunities, which must be identifi ed and faced together with its stakeholders, all along the value creation chain. The future is now! Emi Stefani Luigi Lazzareschi GROUP PROFILE Sofidel Group in figures Mission and vision Culture, ethics and values 8 2017 INTEGRATED REPORT GROUP PROFILE 9 SOFIDEL GROUP IN FIGURES h/per capita From its headquarters in Porcari (Lucca), Sofidel co-ordinates 11.5 1,724 HOURS the work of 19 companies in Europe and the United States. (*) The Group, unlike in previous years, has decided to show the net con- million Euro It has more than 6,000 employees, production capacity of solidated turnover to provide greater comparability with the data shown in OF TRAINING CONSOLIDATED NET 1,098,000 tonnes and a consolidated net turnover of € 1,724 the Report on Operations. PER EMPLOYEE million compared to € 1,705 million in 2016.(*) TURNOVER over 70,000 HOURS 512 TJ OF TRAINING TOTAL PRODUCTION OF ENERGY FROM 51 RENEWABLE SOURCES YEARS IN BUSINESS 1,098,000 over tonnes PRODUCTION CAPACITY 25,600 HOURS OF TRAINING ON HEALTH AND SAFETY presence in 13 l/kg 7.1 COUNTRIES WATER 21.1% REDUCTION IN CARBON CONSUMPTION INTENSITY COMPARED TO 2009 19 million Euro COMPANIES 5 INVESTMENT over IN ENERGY 6.000 EFFICIENCY EMPLOYEES The environmental indicators shown on pages 8-9 are annual projections based on the period January to October 2017. 10 2017 INTEGRATED REPORT GROUP PROFILE 11 MISSION CULTURE, ETHICS AND VALUES Making everyday life tidier, cleaner, safer, The modus operandi of Sofidel is based on tradition, values egy of the organization: the creation of shared value and more practical and pleasant and hard work, with a strict regard for ethics. Management enhancing relations with stakeholders throughout the value has implemented a new managerial model, Management by chain. Values, whose construction and development is supported It is fundamental for Sofidel to work with stakeholders in a by three pillars: ethical values, basic objectives of the com- healthy and constructive way, and also to take part in initia- by investing in pany and the managerial philosophy underlying the business tives to promote and enhance the social and environmental as a whole. fabric within which the company lives and works. Operating in compliance with ethical values represents a val- One of the concepts which best explains and summarises people and innovation and promoting ue added for Sofidel in terms of its operations, fully compati- the management philosophy and culture of the Sofidel Group ble with its profitability. Sofidel has therefore adopted an Eth- is Less is more: aware of the finite and precarious nature ical Code, which contains the Group’s values, the principles of of the resources required by both man and industrial pro- conduct based on sustainability, its behaviour and the principles of its conduct towards stake- duction, the company’s daily operations are marked by an holders, as well as a Sustainability Charter which summa- attitude focused on reducing waste and inefficiencies, aim- commercial transparency and respect rises all its commitments regarding sustainability, which for ing to continually improve production methods and reduce Sofidel is a fundamental lever for the value creation process. consumption. Since the early years, attention to detail, order for regulations, During this process, the social strategy and the competitive and precision have formed the basis for the tagline of the cor- strategy have merged,