59 ReSPOnSIBLe BUSIneSS MAnAGeMenT58 ReSPOnSIBLe BUSIneSS MAnAGeMenT MONCLER GROUP 2023

terfeiting. To protect the health and safety of its clients, the Group requires its suppliers to operate in accordance with the most re- strictive international laws applicable to hazardous or potentially hazardous chemicals and constantly verifies the chemical com- position and the physical and mechanical characteristics of its products. Suppliers are contractually bound to comply with the guidelines contained in the Group s Product Restricted Substances List (PRSL) and Manufacturing Restricted Substances List (MRSL) published on the corporate website. In particular, the PRSL applies to materials, treatments and products, and includes not only the requirements of the most restrictive regulations of the producing and selling countries, but also other more stringent voluntary re- quirements in line with a precautionary approach. The proper im- plementation of these guidelines is verified through tests on the chemical composition of the raw materials carried out at special- ised third-party laboratories by the supplier and/or Moncler and Stone Island. Both brands have established a completely dedicat- ed internal function (Operations Compliance department) to fully monitor this risk. See also pages 169-171.

With the aim of protecting the clients and the Brands the Group has been committed to fight counterfeiting. Both Brands have therefore put in place a series of management and preven- tion tools managed by the Group s Brand Protection and Intellectual Property department: from the formulation of detailed procedures to collaboration with law enforcement, customs and other luxury brands, training and audits of suppliers and use of anti-counterfeit- ing labels applied on all products. See also pages 143-145.

For an overview of the various types of risks to which Moncler is exposed, in addition to the above, see the Board of directors Re- port in the 2023 Annual Financial Report.

CLIMATe CHAnGe RISK AnALYSIS In LIne WITH THe TCFd

It is now clear that climate change is a complex and urgent challenge that will have a major impact on the future of the planet and society. Rising average tem- peratures are at the base of extreme natural events such as floods, tornadoes, forest fires, rising sea levels, droughts, decreased productivity and altered agri- cultural ecosystems, etc. These events are resulting in significant changes as well as economic, environmental and social costs. This scenario can also have sub- stantial impacts and repercussions on various industries and companies.

Since 2021 the Moncler Group has been voluntarily analysing business risks linked to climate change according to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFd) of the Financial Stability Board: Governance, Strategy, Risk Management, Metrics and Targets. In addi- tion, by responding to CdP s Climate Change questionnaire, the Group public- ly shares the results of the analyses of the various climate scenarios taken into account to assess the main risks arising from climate change, with potential im- pacts, for example, on the main operating offices in Italy and Romania, as well as on specific geographical areas in the Group s supply chain. These analyses and assessments are carried out periodically and, where necessary, are integrated into the organisation s list of risks and opportunities5.

The activities in this area are coordinated by the head of the Risk Manage- ment function responsible for managing risks and the enterprise Risk Manage- ment (eRM) process, on behalf of the director in charge of the Internal Control and Risk Management System (ICRMS), in collaboration with the Sustainabili- ty Unit. The results of the assessments are shared periodically with the Control, Risks and Sustainability Committee.

In line with the TCFd s recommendations, in addition to physical risks, i.e. those related to the physical impact of climate events, transition risks related to the process of transition to a low-carbon economy, changes in public policies, regulations, technology and client choices, were also considered.

Regarding physical risks, an assessment was performed on the basis of the climate scenarios identified by the Intergovernmental Panel on Climate Change (IPCC) (RCP 2.6, 4.5 and RCP 8.5)6. In particular, the RCP 4.5 and RCP 8.5 scenarios present an intermediate emissions scenario, aligned with the Paris Agreement, and a business-as-usual scenario with increasing greenhouse gas emissions and limited climate policies, respectively. The analysis is performed over two different time horizons: medium term (2030) and long term (2050), to assess how climate events can evolve and affect the business. Also with regard to transition risks an analysis was carried out on the basis of

5 More details on climate scenario analysis methodology and the related financial impact assessment results may be consulted on and download- ed from the website.

6 Representative Concentration Pathway.

the two scenarios identified by the International energy Agency (IeA), which sets out two main paths of the energy system evolution: a scenario that reflects existing and planned government policies, without achieving the objective of containing the temperature increase within 2°C, and a decarbonised scenar- io (Sustainable development Scenario - SdS), which pursues the main ener- gy objectives of sustainable development, including full access to energy and the containment of the temperature increase well-below 2°C and which calls for developed economies to achieve net-zero emissions by 2050. According- ly, in line with what has been done for physical risks, the analysis of transition risks is also performed over two different time horizons: medium term (2030) and long term (2050), in order to assess how climate events can evolve and af- fect the business.

In 2022 the Group begun quantifying the risks and opportunities identi- fied in terms of financial implications. The first financial impact assessment was carried out through a tool of an internationally recognised provider, whose meth- odology and results are aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFd).

The results of the climate scenario analysis were integrated into the quantitative assessment of the eRM, which estimates the likelihood of occur- rence and impact and classifies risks by level of importance based on financial impact. The most significant risks are monitored by the Control, Risks and Sus- tainability Committee.

during 2023, the analysis, conducted with the support of an external part- ner, was extended to the potential impacts that acute physical climate change events, such as droughts and floods, may have on the supply of raw materials through supply chain disruptions and price volatility. In particular, the analysis was carried out according to the RCP 4.5 and RCP 8.5 scenarios for cotton, one of the Group s key raw materials. Literature studies analysed in the course of the project have shown that, in general, the cotton plant is inherently resistant to heat and drought and that it can grow without requiring additional water supply be- yond normal rainfall. However, the correlations between global historical data and the occurrence of extreme weather events show that events such as intense, prolonged droughts and persistent floods can affect the availability of cotton in some areas and thus lead to an increase in the price of the raw material. Following the analysis carried out on the Group s data, the financial impact in terms of esti- mated additional annual operating costs was not significant for the organisation.

The Group is committed to continuing to align itself with the TCFd recom- mendations with the goal of continuing to integrate the metrics and targets used to measure the climate-related financial impact on the basis of the risks and op- portunities analysed.