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RESPONSIBLE SOURCING

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(1) are required when entering into a contract with Moncler to sign the Moncler Code of Ethics, which outlines the principles and guidelines that inspire the Company’s activities and guide 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 an even more 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 a responsible way of doing business. 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 the social and environmental field.
In-house specialists and/or qualified third-party bodies 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 audits in 2018 on suppliers and subcontractors. 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 such as the amount of orders placed with the given supplier, the type of good or service provided, and geographic location were taken into account. The analysis also considered other parameters, such as the supplier’s number of employees and plants, and/or the use of subcontractors and their geographic location.
During the two-year period 2017-2018, the Group carried out 204 ethical and social audits (on both suppliers and subcontractors), covering 100% of the volumes assigned to outerwear manufacturers (of jackets), 90% of the volumes assigned to knitwear manufacturers and suppliers of footwear and bags, 70% of down suppliers and a sample of suppliers of other raw materials.
In the same period, 10 environmental audits were carried out on a sample of raw material suppliers (in particular, on fabric and down suppliers and on suppliers with in-house galvanic processing). Moncler aims to continue strengthening its monitoring activities in this area.
Additional audits on animal welfare and on down traceability as per 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.
In 2018, most instances of non-compliance were related to issues of occupational health and safety and management of employment relationships. All non-compliance cases were addressed through corrective actions agreed upon with the suppliers and these were verified via follow-up audits. The audits carried out in 2018 found two cases in which 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, in 2018 Moncler decided to support its supply chain in a number of ways.
The Company has launched a support programme for a number of strategic suppliers, making health and safety experts available to provide advice and develop knowledge of best practices, 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 due account of sustainability aspects. Each indicator will be weighted, contributing to the overall assessment of each supplier based on scores achieved in the different areas. The vendor rating macro-areas updated in 2018 were:
• sustainability and compliance (working conditions, environmental practices, animal welfare, etc.);
• quality (defect rate in manufacturing, quality grievances reported to the customer service, etc.);
• delivery and service level (flexibility, punctuality of delivery, etc.);
• costs (price competitiveness, logistics costs, etc.);
• innovation (technological capacity, appetite for innovation, etc.).

NOTES

1 90% of significant contracts require compliance with the Group’s Code of Ethics.

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