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For Moncler, talking about quality also means talking about health and safety, respect for human rights, environmental protection and, in general, ethics in business conduct along the entire value chain. Being a socially responsible Company involves taking on a commitment that stretches well beyond its boundaries, embracing the entire supply chain. Suppliers are strategic partners and Moncler’s relationship with them goes beyond strictly economic and commercial aspects. At Moncler, excellence means quality, style, and innovation, but also commitment to promoting respect for workers’ rights, animal welfare, and the environment across the supply chain.

Moncler’s attention to ethical, social and environmental aspects along the supply chain starts from the supplier selection phase and continues with systematic awareness raising and monitoring activities. Knowledge, traceability, sharing of best practices and monitoring are fundamental not only to limit risk situations, but also and above all, to generate culture and promote responsible and sustainable business development, to the benefit of the entire supply chain.

Suppliers 4 are required when entering into a contract with Moncler to sign Moncler’s Code of Ethics, which outlines the principles and guidelines that inspire the Company’s activities and guides the behaviour and actions of all those with whom Moncler has relations. By signing the Code, suppliers undertake to comply with these principles and to have their subcontractors comply with them as well. Any violation of the principles set out in the Code constitutes a breach of contract, which entitles Moncler, depending on how serious the breach is, to terminate the contract immediately.

For years now, the Group has a Supplier Code of Conduct in place to provide Moncler partners with accurate operational guidance. It is consistent with the Universal Declaration of Human Rights and the conventions of the International Labour Organization (ILO), and describes Moncler’s expectations regarding responsible working. It consists of six sections (Labour and Human Rights, Occupational Health and Safety, Environment, Animal Health and Welfare, Safety and Quality of Products and Services, and Corporate Ethics), and sets forth the mandatory requirements to become or continue to be a supplier of the Moncler Group.

Moncler requires potential suppliers, from the very first steps of the selection process, to provide adequate information and documentation that may help understand their actual commitment in this field. In-house specialists and/or qualified third-party bodies also carry out preliminary visits and checks for Moncler on these aspects before the Company enters into new business relationships. The outcome of this assessment is a prerequisite for initiating any form of collaboration. In addition, a comprehensive sustainability Self-Assessment questionnaire has been developed, focusing on the main issues related to workers’ rights, health and safety and the environment, which potential new suppliers are required to complete. The monitoring of its supply chain continues with stringent ethical, social and environmental audits in order to verify compliance with the applicable laws and the principles set out in the aforementioned Codes. During the year, Moncler further consolidated its auditing activities across the supply chain, going from 60 audits in 2017, to 144 in 2018 and

152 audits in 2019, for a total of 356 audits on suppliers and subcontractors for ethical and social activities carried out in the three-year period 2017-2019. In line with previous years, the audits were conducted by qualified and experienced independent bodies to ensure maximum impartiality. The audits were centred on fundamental human and workers’ rights, particularly on forced labour, child labour, freedom of association, working hours, minimum wages and – last but not least – occupational health and safety. The scope of the audits and the suppliers and subcontractors to be audited, were selected based on a risk analysis and on whether a supplier and the related supply chain are considered strategic. In particular, factors such as the amount of orders placed, the type of good and service provided, significance for the business, geographic location and other parameters were taken into account, such as the supplier’s number of employees and plants, and/or the use of subcontractors and their geographic location and any difficulty in quickly replacing the supply chain.

Based on a three-year audit plan, high monitoring coverage of the entire supply chain has been achieved. During the three-year period 2017-2019, 356 ethical-social audits were carried out (both on suppliers and sub-contractors), equal to approximately 100% of the volumes assigned to outerwear sub-contractors, 90% of the volumes assigned to façon knitwear manufacturers and suppliers of footwear and bags, 81% of the number of down suppliers and tanneries, 44% of the volumes assigned to suppliers of soft accessories. Furthermore, in 2019, ethical and social audits were carried out also on service providers in relation to logistics platforms and external quality control platforms as well as security suppliers at Moncler offices and stores. The Company aims at maintaining 100% coverage of the façon manufacturers over three years and gradually extending it to other types of supplier.

In relation to environmental audits, during the threeyear period 2017-2019, 17 were also carried out on a sample of raw material suppliers (in particular on fabric, down suppliers, suppliers with in-house galvanic processing and tanneries). Moncler aims to continue strengthening its monitoring activities in this area.

Additional audits on animal welfare and on down traceability as per the DIST Protocol (Down Integrity System & Traceability) were conducted across the entire down supply chain.

Moncler has a zero-tolerance policy against major compliance breaches, which can lead to immediate contract termination. That being said, the Group is committed to raising awareness and driving continuous improvement within its supply chain, requiring the implementation of corrective measures when deemed necessary. In this case, the Group verifies that corrective measures are implemented by an agreed deadline through follow-up audits both on-site and documentary.

As in previous years, in 2019, an improvement plan was released following each audit, the implementation of which was subject to subsequent monitoring. In 2019, most instances of non-compliance were related to issues of occupational health and safety and management of employment relationships. During the audits carried out in 2019, 10 cases were identified where the supplier’s conduct was found to be not in line with Moncler’s ethical principles and therefore

the collaboration in place was terminated. Aware that fostering supplier responsibility principles benefits mutual sustainable growth, in addition to ongoing awareness-raising activities on ethical, social and environmental issues, Moncler supports its supply chain in a number of ways.

The Company continued its support programme for a number of strategic suppliers in 2019, making health and safety experts available to provide advice and develop knowledge of best practices to 21 suppliers, as well as financial support for investments in technologically advanced machinery for special processes.

Finally, Moncler is updating its vendor rating system by including new social and environmental indicators with the aim of providing an overall assessment of the supplier that takes into account sustainability aspects. Each indicator will be weighted, contributing to the assessment of each supplier based on scores achieved in the different areas. The vendor rating macro-areas are:

 

• sustainability and compliance (working conditions, environmental practices, animal welfare, etc.);

• quality (defect rate in manufacturing, quality grievances reported to the client service, etc.);

• delivery and service level (flexibility, punctuality of delivery, etc.);

• costs (price competitiveness, logistics costs, etc.);

• innovation (technological capacity, appetite for innovation, etc.).

During 2019, a pilot project was implemented in the field of supplies of raw materials, and in particular for fabrics and accessories (including zip and buttons), to assess the areas of quality, deliveries and service level. About 90% of the fabric suppliers (in terms of volumes purchased) and about 100% of the accessories suppliers (in terms of turnover) were assessed and classified.

This project will be extended to the other macro-assessment areas and will involve a larger number of supplier categories.

In relation to “indirect” suppliers, that is suppliers of goods and services not related to products, in 2019, a complete mapping of the quality, social, environmental and health and safety certifications held by suppliers was carried out. Of the approximately 200 main suppliers, almost all of them have at least one certification and one third of these already have UNI ISO 45001 and/or UNI ISO 14001 certification. An awareness-raising activity was also launched to promote improvement objectives

related to the certification process, in particular regarding the environment and health and safety. In 2020, the process of mapping and monitoring partner’s reliability will be completed using information taken from external information providers while using also greater detail on indicators specifically related to sustainability through a dedicated scorecard.

For most suppliers, the qualification and assessment procedure was digitized with the Moncler Supplier Portal which guarantees immediate access and verification of data and documents and continuous monitoring of the supplier register.

NOTE

495% of significant contracts require compliance with the Group’s Code of Ethics.

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