In 2021 a project was launched to update the methodology un- derlying the ERM model; it will be finalised in the first months of 2022. The project is designed to ensure a better alignment of the risk portfolio with the Strategic Plan, an update of the assess- ment scale for the risk appetite, alongside with the introduction of a quantitative multi-scenario methodology to measure the main risks reported.
In addition, during the year the ERM model was integrated with climate change risks, consistently with the recommendations of the Financial Stability Board's Task Force on Climate-related Fi- nancial Disclosures (TCFD).
The results of ERM activities are presented every six months to the Control, Risks and Sustainability Committee and the Board of Directors, as an integral part of the report made by the Head of Internal Audit on the functioning and adequacy of the internal control and risk management system.
The Moncler Group s ERM model involves the following bodies: the Board of Directors, which sets the guidelines and as-
sesses, at least once a year, the adequacy of the internal control and risk management system (ICRMS)
the Control, Risks and Sustainability Committee, which supports the assessments and decisions of the Board of Di- rectors relating to the risk management system with ade- quate investigations and proposals
the Director in charge of the Internal Control and Risk Man- agement System, responsible for establishing and main- taining an effective internal control and risk management system and implementing the guidelines set by the Board of Directors together with the Control, Risks and Sustain- ability Committee
the Head of the Group Internal Audit division, responsible for verifying that the internal control and risk management system is functional and adequate and for coordinating the ERM process
the Board of Statutory Auditors, which monitors the effec- tiveness of the ICRMS.
ENVIRONMENTAL, SOCIAL AND COMPLIANCE RISKS With operations in various countries around the world, the Mon- cler Group believes that respect for people and human rights, pro- tection of the environment and compliance with laws, should be considered a prerequisite for responsible business management. It thus commits to implement the necessary policies, perform due diligence and appropriate checks and provide training and in- formation in order to minimise any risks related to these issues. These risks are reported within the company s Enterprise Risk Management model along with their probability of occurrence and level of impact.
SOCIAL RISKS Concerning our people, among the main risks relating to human resources management, the Group has identified the potential risks of reliance on key people and of difficulty in retaining and developing talent. To address these risks, a performance assess- ment system has been implemented, covering the entire corpo- rate population and taking into account both soft skills and hard (technical) skills. This system allows to enhance and develop in- dividual skills in the medium and long term, to define succession plans and nurture the best talent. In addition, the Group has de- veloped an incentive plan specifically aimed at managers and key personnel in order to promote their retention. See also pag- es 107-109.
The risk of human rights violations against the employ- ees of Group companies is considered at the theoretical risk lev- el, owing to the protections provided by the various laws and/or collective labour agreements, the working standards set out in the Moncler and Stone Island Codes of Ethics, and, above all, the oversight activities in place at the corporate offices. In addition, the Group is updating its Personnel Recruitment Policy in order to ensure a robust selection and recruitment process in accordance with the principle of equal opportunities, to promote diversity and ensure the development of an inclusive environment starting with the candidate experience phase. See also pages 98; 114-117.
The Group s business model entails the manufacture of the prod- ucts through the production site owned by Moncler in Romania, as well as through façon manufacturers and finished products sup- pliers in Italy and abroad. In addition, both Moncler and Stone Is- land purchase raw materials and services from a large number of suppliers worldwide. The variety of partners and the geographi- cal scope of the Group s operations have led to significant invest- ments in preventing and monitoring the existence of any risks related to human rights violations along the supply chain, with a particular focus on façon manufacturers, specialised workshops and main logistics operators. With the help of certified special- ised firms, Moncler and Stone Island regularly verify that their supply chain complies with applicable laws and the principles set forth in the Code of Ethics and in the Supplier Code of Conduct. These latter, in particular, lay down the standards of conduct with which suppliers must comply, failing which, the collaboration may be terminated. The Group is also committed to raising awareness of the importance of responsible procurement principles among its partners, through training activities. Following the audits con- cluded in 2021, some limited situations of non-compliance with specific regulatory elements were identified, including certain as- pects of remuneration, such as overtime pay for all overtime hours worked, and health and safety, such as certification of fire preven- tion, inadequate management of delegated powers and training at plants, safety exits and extinguishers that do not meet regulato- ry requirements. The resolution of these aspects is the subject of follow-up activities on the basis of predefined timescales accord- ing to the severity of the irregularities detected. Serious non-con- formities compromise the continuing relationship with suppliers. See also pages 140-144; 147.
ENVIRONMENTAL RISKS The Group also pays particular attention to environmental as- pects and the related risks throughout its activities and the ones of its partners due to the fact that the most significant impacts are indirect. These risks are integrated into the corporate Enter- prise Risk Management (ERM) process. One of the strategic driv- ers of the Sustainability Plan is the fight against climate change, demonstrating the Group s priority commitment to preventing and mitigating such risks. In this regard, Moncler joined the Sci- ence-Based Targets initiative in 2020, setting greenhouse gas emissions reduction targets that are consistent with the United Nations commitment to limit the maximum increase in global tem- peratures compared to pre-industrial levels. Following the Stone Island acquisition, in 2021, the Group began an update process to review its CO2 emissions reduction targets as recommended by the SBTi guidelines, to include all Moncler and Stone Island CO2 emission sources and reflect the size and scale of the business.
In general, within the framework of environmental risks, the Group defines rules, processes and control activities to manage any environmental risks associated with its suppliers by adopt- ing the Code of Ethics and the Supplier Code of Conduct. Compli- ance with the binding provisions contained in these documents is verified by environmental audits carried out by specialised third parties. In terms of direct environmental impacts, the Group is implementing numerous initiatives aimed at minimising such impacts by adopting an Environmental Policy, implementing an environmental management system, defining public commit- ments and targets for reducing energy consumption, while also involving and raising awareness of its employees in reducing pa- per, toner and energy consumption and promoting waste sorting. Moncler is ISO 14001 certified at its corporate offices, the logis- tics hub in Castel San Giovanni (Piacenza) and at the production site in Romania; with regards to Stone Island, the process of ob- taining this certification began in 2021 with the goal of certifying the corporate offices in Milan and Ravarino (Modena) by 2022. See also page 196.
Lastly, the focus on animal welfare is an area of particu- lar commitment for the Moncler Group. Both Brands thus require their suppliers to comply with the animal welfare requirements set forth in the Supplier Code of Conduct. In particular, Moncler de- mands and verifies that all its down suppliers comply with strin- gent requirements set out in its proprietary Down Integrity System & Traceability (DIST) Protocol. The Group continuously carries out
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