SUSTAINABILITY REPORT 2010 · 2019-12-04 · The Chairman’s Letter 8 Note on Methodology – How to Read This Report 10 1.1 Alcantara S.p.A. 15 1.1.1 The Company’s History 16

SUSTAINABILITY REPORT 2010

SUSTAINABILITY REPORT2010

Alcantara S.p.A.

The Chairman’s Letter 8Note on Methodology – How to Read This Report 10

1.1 Alcantara S.p.A. 15 1.1.1 The Company’s History 16 1.1.2 The Company’s Structure 17 1.1.3 Fields of Application of Alcantara® 181.2 Governance and Sustainability Management Systems 19 1.2.1 Governance Structure 19 1.2.2 Operational Structure 21 1.2.3 Responsible Management and International Certifications 221.3 Mission, Values and Strategic Orientation 24 1.3.1 Mission, Values and Reference Principles 24 1.3.2 Strategic Orientation 251.4 The Stakeholders: Listening, Dialogue and Involvement Initiatives 27

2.1 General Economic Indicators 342.2 Added Value 352.3 Investments 38 2.3.1 The Investment Forecasts for 2011 392.4 Suppliers and Partners 41 2.4.1 Supplier Relationship Policies 41 2.4.2 Composition and Type of Suppliers 42 2.4.3 Development of the SA8000 Responsible Procurement System 432.5 Public Institutions 44 2.5.1 Government Financing 45

3.1 Human Resources 49 3.1.1 Staff Management Policies 50 3.1.2 Composition of Staff and Turnover 50 3.1.3 Diversity and Respect of Human Rights 52 3.1.4 Incentive and Remunerations Systems 53 3.1.5 Training and Valuation 54 3.1.6 Industrial Relations 56 3.1.7 Health and Safety 58 3.1.8 Internal Communication and Staff Satisfaction 613.2 Customers 63 3.2.1 Marketing Policy and Innovation 65 3.2.2 Characteristics and Analysis of the Customers 65 3.2.3 Product Sustainability and Safety 69 3.2.4 Customer Satisfaction and Quality System 71 3.2.5 The Research Centre and New Products 74 3.2.6 Communication and Events 743.3 The Community 77 3.3.1 Community Relationship Policies 77 3.3.2 Sponsoring and Free Gifts in its Fields of Operation 78 3.3.3 Activities in the World of Research and Creative Innovation 79 3.3.4 Relations with the Media 79 3.3.5 Trade Associations 80

4.1 Environmental Policy and Management System 874.2 Environmental Impacts of Alcantara S.p.A. 884.3 Use of Raw Materials 904.4 Energy Requirement 924.5 Atmospheric Emissions 944.6 Carbon Neutrality: Offsetting CO2 Emissions 974.7 Water Requirement 994.8 Production of Waste 1004.9 Environmental Investments 1014.10 Environmental Education and Other Initiatives 102

G3 CORRESPONDENCE TABLE 104FINAL PUBLIC DECLARATION FROM TÜV SÜD 112

CHAPTER 1IDENTITY AND

RESPONSIBILITY13

CHAPTER 3SOCIAL SUSTAINABILITY47

CHAPTER 4ENVIRONMENTAL SUSTAINABILITY83

CHAPTER 2ECONOMIC

SUSTAINABILITY31

The Chairman’s Letter

In 2010 we renewed our commitment to sustainability and we remain convinced that the company’s economic development must go hand in hand with social equity and a healthy environment. In confirmation of this, Alcantara S.p.A. also retained its “Carbon Neutrality” certification and used electricity exclusively from renewable sources.

In the near future we will intensify our effort to reduce emissions, in particular those associated with importing raw materials, by selecting mainly Italian and/or European manufacturers. We will continue to take our electricity from a hydroelectric power plant situated near our production plant and research centre. An ever-increasing number of products will be made from recycled raw materials and we remain committed to involving local partners and communities in our sustainability activities to an ever-increasing degree. It is also our intention to continue to pursue integration of our management systems (SA8000, ISO/TS 16949, UNI EN ISO 14001, UNI EN ISO 9001) to ensure progressive and effective conformance with the principles of the UNI ISO 26000 standard.

Andrea Boragno,Chairman and CEO of Alcantara S.p.A.

In February 2010, Alcantara S.p.A. was awarded the “Andrea Pininfarina” special prize for excellence in innovation by the President of the Republic. This prize, awarded only to the very best of the member companies, was presented by Emma Marcegaglia at the celebrations for the centenary of Confindustria and represents an important recognition of the company’s commitment on several fronts, from technology to research and sustainability, and in its search for excellence.

In June 2010, the company won the “Sodalitas Social Award” for the best Sustainable Marketing and Customer Relationship Management campaign.Since 2002, the prize has been awarded every year to organizations that have undertaken concrete Corporate Social Responsibility and Sustainability projects. “Alcantara S.p.A. – Zero Carbon Footprint – sustainable production”: this is the title of the winning project that enabled the company to fully offset the environmental impact of its production in terms of emissions. (For further information, see paragraph 3.2.3 of this report).

GUIDELINES USED AND SCOPE OF THE REPORT The second edition of the Sustainability Report was written following the Sustainability Reporting Guidelines drawn up by the Global Reporting Initiative (GRI-G3) and in respect of the reporting principles expressed in it, including the principle of prudence. Use was also made of the guidelines for drafting the Social Report drawn up by the Social Report Study Group (G.B.S.) and AccountAbility 1000, a process standard established by the ISEA (Institute of Social and Ethical Accountability), which pays particular attention to communication with the stakeholders.

THE REPORTING PROCESSIn order to prepare the Sustainability Report, an internal process involving the structure was implemented with the cooperation of all areas of the organization. The scope of the report and reporting frequency coincide with that of the financial statements apart from exceptions specified on a case by case basis. With respect to the previous edition, the sustainability report has not undergone any significant changes in its objective, scope or methods of measurement and considers all activities that have a significant impact in terms of sustainability in accordance with the requirements of the GRI-G3 standard.

The information was obtained using special forms, which represent a basic measurement system that permits future developments of the process and above all traceability and the possibility of checking the procedure for collecting and reporting on the information, which was subject to independent review this year.During this financial year, Alcantara S.p.A. developed a reporting process and number of indicators such as to confirm level A+ of the application of the standard.

Note on the MethodologyHow to Read This Report

Contacts:Alcantara S.p.A.Via Mecenate, 8620138 MilanTelephone +39 02 580301Fax +39 02 [email protected]

We would like to thank the entire Internal Work Group and staff involved who collaborated in the development and production of this 2010 Sustainability Report. Prepared and Coordinated by: Alcantara S.p.A. – Technical and scientific support: REvalue srl

OU

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PROFILE

MANAGEMENT METHOD

PERFORMANCE INDICATORS

LEVELS OF APPLICATION

Same requirements as for level B

Information on the management method of each category of indicators

Report on all performance indicators as in G3 and the trade supplements applicable with regard to the materiality principle. Explain any omissions

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B+

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C+

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C

Report on:1.12.1 - 2.103.1 - 3.8 - 3.10 - 3.124.1 - 4.4 - 4.14 - 4.15

Not required

Report on at least 10 performance indicators including at least one of the following indicators: economic, social and environmental

Report on all criteria for the CE level on:1.23.9 - 3.134.5 - 4.13 - 6.16 - 4.17

Information on the management method of each category of indicators

Report on at least 20 performance indicators including at least one on: economic, environmental, human rights, work, society, product responsibility

B

GRI-G3 CORRELATION TABLE

IDENTITY AND RESPONSIBILITY 1

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Alcantara S.p.A. is the company that manufactures and sells upholstery material under the registered trademark Alcantara®, a unique and innovative product that is the result of the application of unique, proprietary technology.Alcantara® offers an extraordinary combination of feel, beauty and functionality, together with an ethical and social awareness that defines a modern-day lifestyle: the lifestyle of those who want to get the most out of the products they use every day in respect of the environment.The ® symbol has multiple meanings: it means highly distinctive technology, advantages of use and lifestyle and it protects consumers against imitations.

Alcantara S.p.A. 1.1

Alcantara®: an innovative materialAlcantara S.p.A. constantly invests 3% to 5% of its sales in Research and Development activities.The Research and Development department of Alcantara S.p.A. is an international centre of excellence for research and the only structure of its kind in industry. Its open approach to technological evolution takes form also through important relationships with leading European university institutions.

The technological components behind the manufacturing process of Alcantara® permit a continual improvement in the performance of the material and the production of new products and variants designed specifically for several different fields of application. This enables the company to consolidate its technological leadership and constantly renew its processes and know-how, keeping an eye on the future.

Within the Research and Development department, the Application Development Centre is entirely dedicated to assessing the performance of the material and the development of new technologies and machining processes, at the request of its partner customers. Through the Application Development Centre and by working together with its customers, Alcantara S.p.A. can modify the characteristics of the material and provide ad hoc application solutions.

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The Company’s Structure

Alcantara S.p.A. comprises:- the production plant and research centre in Nera Montoro, an integrated end-to-end cycle facility. The

complex production process is highly automated and divided into several stages;- the Headquarters in Milan, where the organization’s management is located and purely commercial and

administrative activities are carried out.

The share capital is made up of ordinary shares worth 1 euro each and, on 31st December 2010, the issued and paid share capital of Alcantara S.p.A. amounted to 10,800,000, divided up as indicated below..

The portfolio of Alcantara S.p.A. does not include its own shares or shares of holding companies, neither directly nor indirectly through a trust company or third party; it is controlled 100% by the company PiGreco Srl (Italy). The holding company and the subsidiary do not lie within the scope of this Sustainability Report (for further details, see the financial statements).

The Company’s History

Alcantara® is a versatile material used by prestigious international companies operating in a wide range of fields of application. The charm of Alcantara® is the result of a major technological breakthrough, an invention made in 1970 that remains unrivalled even today and enables the product to remain unique and avant-garde.

The fundamental stages in the growth of Alcantara S.p.A. are listed below.®: the Japanese scientist Miyoshi Okamoto filed the patent for producing the

material;ANIC Group, subsequently ENI, for the commercial use of the patent (i.e. a Joint

Venture between ENI group and Toray Group, (the provider of the basic technology);ANTOR S.p.A. (acronym of ANic TORay), with a share capital of one million Italian

lire, made up of 1,000 shares of which 51% were held by ANIC (subsequently ENI) and 49% by SOFID (Financial company of the Group);

IGANTO S.p.A. (acronym of Italia Giappone ANic TOray) to seal a partnership between the two countries and their companies;

ALCANTARA S.p.A., with a share capital of which 51% was still held by the ENI group and 49% by the Toray group;

Toray Group for a total of 100% ; immediately afterwards transfer of 30% of the shares by the Toray Group to the Mitsui Group;

Carbon Neutrality certification;

Alcantara S.p.A. has consolidated considerable technological know-how over time, thus enabling it to meet the technical and stylistic needs of their customers, developing colours, product variants and new technologies on request, in response to the most complex of briefs.

1.1.21.1.1

CompanyNumber of ordinary shares

% ownership2008 2009 2010

Toray Industries Inc. – Tokyo (holding company) 7,560,000 7,560,000 7,560,000 70

Mitsui & Co. Ltd. Tokyo – Tokyo 2,160,000 2,160,000 3,240,000 30

Mitsui & Co. Europe Holdings Plc – London 1,080,000 1,080,000 - -

TOTAL SHARES 10,800,000 10,800,000 10,800,000 100

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Alcantara S.p.A. has governance and supervisory bodies and a set of management systems and certifications aimed at ensuring a sustainable development of its business in respect of the laws and an economic, social and environmental balance.

Governance Structure

The governance bodies of Alcantara S.p.A. are the Shareholders’ Meeting, the Board of Directors, the Executive Committee and the CEO. The main supervisory bodies are the Board of Statutory Auditors and the Oversight Committee in accordance with Legislative Decree no. 231/2001.

Corporate management is supported by a structured system for reporting on business trends and the progress of the main projects. This also enables incentive systems for managers to be applied on the basis of support for and rewarding of merit and the reaching of the targets set, including the environmental and social targets. Alcantara S.p.A. has not activated any specific communication channels that enable employees to interact directly with the Board of Directors.Nevertheless, the Board of Directors assesses the initiatives in progress and the future projects concerning its sustainability policy aimed at a continuous improvement, through suggestions from the department managers, employees, their representatives and external stakeholders through the work of the bodies listed below and that of third parties that audit Alcantara S.p.A.’s management systems.

1.2.1

Governance and Sustainability Management Systems

1.2

Fields of Application of Alcantara®

Alcantara® has three main fields of application, described below in brief.

1.1.3

Company posts held on 31st December 2010

Chairman and CEO Andrea Boragno

Board of Directors

Hiroshi Honji

Hideki Hirabayashi

Yasuhiro Takagi

Taizo Ishihama

Koji Nagae

Katsuhiko Ito

Board of Statutory Auditors

Giovanni Primo Quagliano (Chairman)

Giuseppe Scibetta

Giuseppe Viganò

Automotive

70%

of total sales

The car industry, which imposes extremely high quality standards, uses Alcantara® without accepting any compromises. Alcantara® interiors ensure maximum comfort for the driver due to the unique characteristics of the material (grip, breathability, strength and durability, softness, resistance of colour to the light) and transform the interior into a beautiful, elegant or sporty environment depending on the stylistic features chosen. An important aspect of the Alcantara S.p.A. offer is represented by the experience and willingness to develop made to measure solutions for all customers in the car industry.

Fashion & Accessories

12%

of total sales

In the fashion world, customers who choose Alcantara® are looking for modern elegance, innovation and refined details. Modern luxury with attention to detail and underlined by the exclusive texture of the material.Bags, hats, shoes and belts made of Alcantara® combine the beauty and softness of the material with exclusive performance: non-toxicity of the product in contact with the skin, breathability and durability.

Interior, Contract & Yacht

18%

of total sales

From the lounge to the sitting room, from the study to the bedroom, all items covered with Alcantara® become bright, comfortable, soft and seductive. In addition, for the Contract sector, Alcantara S.p.A. offers a selection of materials designed for use in hotels, offices and public areas, which have been tested and approved in accordance with the legislation in force in all countries.In the yachting industry, the resistance of Alcantara® to adverse weather and sea conditions, its excellent breathability and functional characteristics guarantee extremely comfortable sailing even for the most demanding passengers.

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The Oversight Committee is the internal body whose task is to supervise and check the operation, effectiveness and respect of the Organization model for the prevention of company crimes implemented in accordance with the provisions laid down in Legislative Decree no. 231/2001 such as corruption and false communications, staff exploitation and many other crimes, and the prevention of behaviour regulated by the Code of ethics such as conflict of interest.

The Organization model and the Code of ethics are closely integrated in such a way as to form a body of internal standards that encourage ethical behaviour and transparency within the company. Any employee may report suspected violations of the Organization model and Civil Code to the Oversight committee or to his/her Line Manager, either anonymously or via a specific mailbox.

Organization model and Code of Ethics http://www.alcantara.com

In 2010, the Oversight committee met three times and was supported in its activities by the internal departments involved as required. The activity focused on checking the correlation between the provisions laid down by the Organization model in accordance with legislative decree no. 231/2001 and the activities and behaviour of the company’s operational structures.In particular, Alcantara S.p.A. referred to the extension of the standards that mark the scope of corporate administrative responsibility. In relation to this, the reference standards are listed below:

no. 81/08 – Italian Legislative decree no. 106 of 3/08/09);

Operational Structure

The company’s organization chart is made up of an operational structure based on the marketing divisions that characterize Alcantara®’s business.The Application Research and Development Centre is located at the plant in Nera Montoro, where the manufacturing activities are also carried out under the responsibility of the Technical Department.

Particular importance is given to the Technical Marketing department which acquires the needs, critical issues and technical and stylistic expectations of the customers and the reference markets, acting as a link between the technical and marketing structures.

1.2.2

GENERAL MANAGER

Accounting, Budget and Tax Affairs

manager

Treasury and Commercial Credit

manager

Planning and Control, Internal

Auditing and Corporate business

manager

Demand & Supply Chain manager

Purchasing manager

Technical marketing, Trends and Design

manager

Production and maintenance

manager

Research and Development

manager

Quality and Technology manager

Safety and Environment

manager

Technical office manager

Management representative for the Quality, Safety and Environment Management System

and Social Responsibility

Certified systems manager

Personnel Administration

manager

Production plant personnel

and organization manager

Central office personnel manager

Central office safety and general

services manager

BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

CHAIRMAN & CEO

Logistics, Purchasing and Technical

Marketing managerTechnical manager Finance and Control

manager

Personnel, Organization and Systems manager

Interior and Automotive Division manager

Fashion Division manager

Corporate Communication manager

ICT and contract manager

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Responsible Management and International Certifications

Some time ago, Alcantara S.p.A. implemented a responsible management policy that enables it to be sustainable, from an economic, social and environmental perspective in order to:

The strategy oriented towards sustainable development is expressed in the Quality and social responsibility policy http://www.alcantara.com

Alcantara S.p.A. has obtained the following International certifications:

1.2.3

SYSTEM CERTIFICATIONS

Standard Title Body Date of first release Date of last check Expiry / Renewal

UNI EN ISO 14001:2004Environment Management System

ICIM May 2000 July 2010 July 2013

ISO TS 16949:2009Car industry quality requirements

ICIM February 2004 November 2010 December 2012

UNI EN ISO 9001:2008Quality management system

ICIM September 1993 November 2010 November 2012

SA8000:2008 Social responsibility SGS October 2008 October 2010 October 2011

ISO 14064-1Greenhouse gas inventory

TÜV SÜD June 2009 February 2010 January 2012

CMS Standard GHG 41 of CARBON NEUTRALITY

Offsetting residual Greenhouse Gas emissions

TÜV SÜD June 2009 February 2010 January 2012

PRODUCT CERTIFICATIONS

Certification Validity

Yachting industry: CE 96/98/EC(valid for single brands/families)

Held since 2000

Oeko-Tex Standard 100(valid for single brands/families)

Held since 1995

®

®

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Alcantara S.p.A. is aware that sustainable development is mandatory requirement and that the search for a balance between economic, social and environmental aspects entails a concrete commitment to building the well-being of future generations.

Mission, Values and Reference Principles

Alcantara S.p.A. bases its work on values of fairness, consistency, innovation, the central role of man and respect for the environment with a view to offering technologically advanced and stylistically sophisticated solutions to meet the needs of its increasingly demanding customers.

Reference PrinciplesIn conducting its business, Alcantara S.p.A. conforms to the principles of legitimacy, loyalty and responsibility. The managers and employees are obliged to respect these principles during their daily work for the company, basing their behavior on clarity, transparency and legitimacy, in the interests of the company’s customers and shareholders.

Mission, Values and Strategic Orientation

1.3.1

1.3

Strategic Orientation

Alcantara S.p.A.’s strategic orientation is based on economic, social and environmental sustainability, and shares this commitment with partner companies and customers.

Management sets the sustainability aims and targets in the Operational Plans. The division managers of Alcantara S.p.A. contribute to the development of the Operational Plans and ensure their implementation with a view to reaching the aims and targets set.

This commitment has also enabled the production cycle to be improved from a sustainable development point of view: all company departments are committed to the project to constantly reduce emissions produced by the company, which was awarded “Carbon Neutral” certification for the entire Alcantara® production process (see also paragraph 4.6 of this document).

1.3.2

MissionAlcantara S.p.A. operates in the high-end upholstery market; its qualifying elements are the use of sophisticated technology, an exclusive business model and a brand name recognized at an International level.

SOCIAL

ECONOMIC

ENVIRONMENTAL

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ECONOMIC

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In order to manage sustainability-related issues and the consequent drafting of the Sustainability Report, Alcantara S.p.A. periodically updates the classification of the stakeholders to adapt to changes and variations in their expectations, as required.Having identified the main categories of stakeholders, the specific composition and, above all, the topics considered material were identified for each of them: issues that influence decisions, actions and the performance of an organization and/or its stakeholders are considered material.

The aim of the materiality analysis conducted to select the information to be indicated in this report is to define the topics considered to be the most relevant and significant for the company and all its reference stakeholders. This analysis was conducted taking the issues and topics indicated by the UNI ISO 26000:2010 guidelines on responsible management as a base of reference. The analysis was then completed with the indications and assessment of the expectations that emerged from the numerous channels and tools through which Alcantara S.p.A. communicates with its stakeholders: they are not occasional measurements but a listening, communication and engagement system that allows constant interaction and monitoring of all the topics directly or indirectly linked to sustainability issues.For example, the most significant engagement activities were carried out through:

1 – analysis of the company’s climate 2 – trade union agreements aimed at improving management and safety 3 – analysis of customer satisfaction and their complaints4 – periodic checks made by customers or supervisory authorities5 – audits conducted at the suppliers’ site in accordance with the SA8000 standard6 – Integrated Environmental Authorization7 – membership of trade associations8 – communication with mass media and local representatives.

The materiality analysis:

The Stakeholders: Listening, Dialogue and Involvement Initiatives

1.4

The stakeholders and material issues were identified following the initial phases of the stakeholder engagement process indicated by the AA1000SES guidelines and applying the principle of materiality laid down by the GRI-G3 guidelines.

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The following graph shows a summary, thus a non-exhaustive representation of the analytical process undertaken. The main social responsibility issues are represented through a table whose variables are the economic, environmental and social impacts significant for Alcantara S.p.A. as well as their influence on the stakeholders’ decisions. The assessment was made on a scale of three levels (low, medium and high).

The result of this financial year represents the basis for an increasingly clear and detailed identification of the interests in which the company acts, both positively and negatively, and a strengthening of the stakeholder engagement strategies.The reporting process expressed in the Sustainability Report confirms the constant attention paid to the creation of value and the management of the brand and also towards the reduction of the impact of the production processes and structures on the ecological balance. The company also has to fulfil both old and new requests, such as expectations in terms of work safety and job stability, the problems associated with energy efficiency and the use of suppliers working in countries with a somewhat antiquated legal system.But, above all, the company’s attention is focused on the growth of “responsible consumption” and a widespread and increasing attention to sustainability along the entire value chain.

Responsible engagement in political life

Biodiversity

Company climate and diversity

Respect of human rights

Employment, attraction of talent and fair remunerationHealth and safety of workers and customers

Innovation and researchAtmospheric emissions- carbon neutrality

Regulatory conformance and fight against corruptionBrand management

Economic balanceCreation of value and well-beingWater and waste management

Transparency and risk managementFair trading and competition

Energy saving and renewable sources

Price and service for the customer

Responsible and aware marketing

Industrial relations and valuation of human capital

Partnerships in the communityResponsible supply chain – responsible procurement

EXTERNAL ENGAGEMENT FOR IMPROVING THE MATERIALITY ANALYSISWith a view to developing a constructive discussion on the materiality of the information contained in the Sustainability Report, Alcantara S.p.A. held a series of meetings aimed at refining the internal analysis through direct discussion and by listening to some stakeholder representatives.The main records are listed here below:ARPA Terni Manager For the environmental authority of the production site, Alcantara S.p.A. has always been a pioneer in the development of good environmental processes and confirms its tendency to go beyond the mere respect of the law through investments and innovative solutions.Mayor of Narni Alcantara S.p.A.’s contribution to the sustainability of the local area is associated mainly with occupational stability, while other companies are abandoning the area, and the presence of a research and innovation centre that bears witness to an investment in local intellectual capital. Production plant and research centre trade union representativeThe workers are aware of the fact that they are working for a company that is sensitive to economic, social and environmental issues and that pays attention to competitive factors to ensure continuous employment but also the health and development of staff. Member of the Board of DirectorsConformance to the laws, standards and code of ethics represent fundamental conditions for creating sustainable value. Alcantara S.p.A. has the fortune of possessing excellence in innovation capable of bringing economic well-being and employment in respect of the environment.Suppliers The strategic orientation of Alcantara S.p.A. towards sustainability is clearly perceived also by the suppliers, who appreciate the responsible attitude and share it in a climate of joint responsibility, in that they are aware of the benefit that it brings not only for the economic operators but also to the local area and workers.

Social and community investments

Low Medium High

Economic, social and environmental impact for the company

Influ

ence

on

stak

ehol

ders

’ ass

essm

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and

dec

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Low

M

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Hig

h

ECONOMIC SUSTAINABILITY 2

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Economic Improvement Objectives

HIGHLIGHTS

Profitability index 2008 2009 2010

R.O.E. 5.3% 3.4% 5.1%

R.O.I. 6.3% 4.1% 6.8%

Sales margin 8.1% 6.7% 7.0%

Main assets and liabilities data (euro/000) 2008 2009 2010

Current assets 91,329 82,015 57,976

Fixed assets 71,988 74,206 76,816

Total Assets 163,317 156,221 134,792

Current liabilities 21,998 18,359 16,047

Medium/long-term liabilities 7,987 6,903 6,608

Total Liabilities 29,985 25,262 22,655

Shareholders’ capital 133,332 130,959 112,137

Total liabilities 163,317 156,221 134,792

Net Financial Position 53,710 46,218 23,632

SIGNIFICANT FACTS AND EVENTS

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In the Sustainability Report, Added Value is understood to mean the difference between the proceeds and costs of production that do not constitute remuneration for the corporate stakeholders. From this point of view, the concept of Added Value adopted here fits the strictest accounting definition because it uses the method proposed in 2001 by the Social Report Study Group (GBS).

The Added Value calculation reveals Alcantara S.p.A.’s ability to create wealth, in the reference period, to the advantage of the stakeholders, in respect of economic management and the expectations of the stakeholders themselves.

The calculation and distribution of Added Value expresses in monetary terms the relationships between the company and the socio-economic system with which it interacts, with particular reference to some of its main stakeholders:

2.1 2.2 Added Value

The efforts made over the years of international crisis have enabled Alcantara S.p.A. not only to maintain its identity and credibility in its sector but to actually consolidate it by making significant improvements from both economic and organizational perspectives. The ability to respond effectively to the adverse global economic conditions has enabled Alcantara S.p.A. to leave unchanged and, in some cases, raise its objectives in terms of creating and distributing added value towards all stakeholders despite the current macroeconomic scenario which is still anything but stable, as indicated by the contrasting signs that emerged during the course of the year 2010: from the positive signs of recovery from countries such as the United States and Germany to the difficulties of Japan and the deep crises of some countries in the euro area and North Africa.In a scenario in which financial stability is still at risk, Alcantara S.p.A. consolidates its corporate results, typical of an industrial company, without neglecting all the resources that come from the relationship with its stakeholders.

General Economic Indicators

GROSS GLOBAL CONSOLIDATED ADDED VALUE

(euro/000) 2008 2009 2010

A) Value of production 83,656 64,764 78,262

B) Intermediate production costs 46,640 34,459 43,744

GROSS CHARACTERISTIC ADDED VALUE 37,016 30,305 34,518

C) Accessory and extraordinary components 1,625 1,481 969

GROSS GLOBAL ADDED VALUE 38,642 31,786 35,487

Alcantara S.p.A. has no debts represented by debenture stocks and does not possess shares of its own or shares of holding companies; its medium/long-term liabilities are exclusively due to employee severance indemnity and provisions for risks and charges.For more information, see the 2010 financial statements.

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The Added Value distributed increased by 11.6% with respect to 2009.The amount of consolidated added value allocated to staff increased in absolute value by 1,349,000 (+7%) with respect to 2009, representing 58% of the Global Added Value and thus confirming a distribution of well over 50% to the staff. A percentage of 14.8% of the Added Value created in 2010 was reinvested in the company; this amount includes the amortization of the investments made in the local area.The company’s financial solidity made it unnecessary to use external financers while the value paid to the Government was 4,114,000 (11.6% of the total) of which 3,349,000 in direct tax and 765,000 in indirect tax. The remuneration for risk capital of 5,476,000 (15.4% of the total added value) is represented by the amount used as a dividend of the profit of the period. Lastly, a sum of 57,000 was earmarked for gifts and sponsoring: further details are given in the “Relationship with the Community” section.

The graph below shows the distribution of Added Value in 2010.DISTRIBUTION OF GROSS GLOBAL CONSOLIDATED ADDED VALUE

(euro/000) 2008 2009 2010

A) Staff remuneration 20,690 19,244 20,593

Permanent staff 19,514 18,187 19,464

13,236 12,285 13,440

4,261 3,947 3,937

1,082 1,033 1,052

935 922 1,035

Non-permanent staff 1,176 1,057 1,129

B) Government remuneration 4,636 3,183 4,114

Direct and indirect taxes 4,636 3,183 4,114

C) Remuneration for borrowed capital 3 3 0

Charges for current or long-term capital 3 3 0

D) Remuneration for risk capital 6,685 4,300 5,476

Part of financial year profit distributed 6,685 4,300 5,476

E) Corporate remuneration 6,570 4,998 5,247

Share of profit allocated to reserves 5 12 2

Amortization 6,565 4,986 5,245

F) Gifts and sponsoring 58 58 57

GROSS GLOBAL ADDED VALUE 38,642 31,786 35,487

Gifts and sponsoring

0,2%

Corporate14,8%

Borrowed capital0,0%

Government11,6%

Risk capital15,4%

Staff58,0%

38 239

The Investment Forecasts for 2011

The investment plan for 2011 is a clear sign of our intention to boost both ordinary management and business development as it presents an increase of 47% with respect to the forecast for 2010 and 32% with respect to the balance of the same period.Another factor that stands out is the company’s strong commitment in the “Health, Safety and Environment” area, which presents a forecast expenditure equivalent to almost twice that of 2010, thus confirming the attention paid to the workplace and the local community.

The investments made in the year 2010 amount to 7.9 million euros, of which 288,000 euros for intangible property assets, and include 831,000 euros of internal cost capitalization: essentially for the labour cost of staff from the maintenance department and technical design office.

The investments are divided into four main areas:

The “rationalization and maintenance” item represents the amount indispensable to maintain and improve the systems and the quality standards associated with production. The considerable increase in cost that can be seen with respect to the previous year is essentially due to the investments made to reduce the energy consumption of the plants, in particular, in the Fiber department.The investments made to safeguard the environment and human rights in terms of health and safety represent a third of the total cost and are always at the centre of the company’s attention, as indicated by the cost estimates, which will be discussed later on.The expenditure for investments presents a deviation from the forecast of about 11% and is due in part to an account for activities in the two main areas of investment.

Investments2.3

2.3.1

PURCHASES DURING THE FINANCIAL YEAR (euros/000) 2008 2009 2010

Plant rationalization and maintenance and quality standards 3,745 3,592 4,801

Safety, health and environment 3,458 2,676 2,491

Research and Development 155 175 41

Information system, marketing structures and other 287 798 536

TOTAL 7,645 7,241 7,869

2010 INVESTMENTS (euro/000) FORECAST BALANCE

Plant rationalization and maintenance and quality standards 4,449 4,801

Health, safety and environment 1,915 2,491

Research and Development 180 41

Information system, marketing structures and other 544 536

TOTAL 7,088 7,869

2011 INVESTMENT PLAN Amount (euros/000)

Plant rationalization and maintenance and quality standards 5,388

Health, safety and environment 3,683

Research and Development 400

Information system, marketing structures and other 941

TOTAL 10,412

40 241

Supplier Relationship Improvement Objectives

commitment clause to the SA8000 requirements and to extend the related audits.

2 along the supply chain.

Supplier Relationship Policies

During the course of 2010, Alcantara S.p.A. respected its commitment to establish a relationship of mutual satisfaction with its direct goods and service suppliers based on fair treatment and equity in the contractual terms signed.

Alcantara S.p.A. has identified as strategic the suppliers operating in the following areas:

Alcantara S.p.A. purchases exclusively raw materials authorized by the community standards (REACH), and subjects every new raw material to a strict assessment with regard to its environmental impact and worker safety before including it in the production process.

Suppliers and Partners

2.4.1

2.4

HIGHLIGHTS

959 suppliers, of which 118 with “priority” in terms of sustainability

Costs for raw, subsidiary and consumable materials:

Costs for services and utilities: 100% for Italian market

26 audits on suppliers


the SA8000 standard

42 243

Alcantara S.p.A.’s supplier qualification and assessment process has been expanded further in order to qualify the supplier in their capacity to respect the principles laid down by the SA8000 standard. In particular, during the course of 2010, Alcantara S.p.A. extended the signing of contractual clauses indicating acceptance of the requirements laid down by the SA8000 standard and the willingness of suppliers to undergo audits at their operational centres to all 118 sustainability priority suppliers.

Composition and Type of Suppliers

In 2010, Alcantara S.p.A. had 959 active suppliers, of which 118 were considered “priority” from a sustainability point of view as they are suppliers of goods and services that have a mutually significant economic impact and that support activities, the effects of which may influence the assessments made by the stakeholders.

The 118 sustainability “priority” suppliers are subdivided according to the relationship established with Alcantara S.p.A.; in particular:

outsourced activities (production process partnership);

potentially become production process partners and/or that are suppliers of significant raw materials.

With specific reference to the geographical location of the suppliers, Alcantara S.p.A. assesses favourably suppliers based near the company sites. Considering the two company sites (the Headquarters in Milan and the production plant and research centre in Nera Montoro), there are 567 local suppliers (59% of the total).

Development of the SA8000 Responsible Procurement System

Since 2007, goods and service suppliers have been collaborating with Alcantara S.p.A. in maintaining the requirements laid down in the SA8000 standard, as well as respecting the National laws in force and the International provisions applicable to their field of activity and operating conditions.

Alcantara S.p.A. has elaborated a schedule of audits on suppliers conducted by qualified experts with a view to checking their commitment to guarantee respect of the SA8000 social responsibility standards. During the audits conducted in 2010, the initial results were collected and the implementation of specific improvement plans on the shortcomings found was requested.

2.4.3

2.4.2

2010 suppliers Number % of total % expenditure

Region of Umbria 154 16% 21%

of these in the Province of Terni 136 14% 20%

Region of Lombardy 413 43% 30%

of these in the Province of Milan 326 34% 26%

Other regions and countries 392 41% 49%

Total 959 100% 934 100%

Type of supplyAudits conducted before

31st December 2009Audits conducted before

31st December 2010

Italy Europe Total Italy Europe Total

Product nobilitation processes 6 -- 6 8 -- 8

Tender and Logistics Services 4 -- 4 7 -- 7

Decontamination and Waste Disposal Services 2 -- 2 2 -- 2

Raw materials 2 4 6 5 4 9

Total 14 4 18 22 4 26

The supplier selection and assessment activity has been further developed with regard to:Health and safety Suppliers working on the production plant are required by Alcantara S.p.A. to respect all of the obligations laid down in the laws and regulations applicable to the safety of their employees and the occupational health conditions. These suppliers may undergo audits on their activities on the plant and at the research centre and in the areas of the work site assigned to them. The interference risk assessment document (DUVRI), which the suppliers sign, thus declaring that they have read it and accept it in full, forms an integral part of the contracts. Regularity of wage and contribution paymentsSuppliers are required by contract to submit the relevant documentation that demonstrates that all the wages and contributions due the workers working for Alcantara S.p.A. have been paid on time.

44 245

Government Relationship Improvement Objectives

of the community and the company.

Government Financing

Alcantara S.p.A. has established a relationship based on transparency and collaboration with the Public Institutions so as to guarantee maximum integrity and fairness.

In 2010 Alcantara S.p.A. received no Government financing but the following applications are currently being considered:

Public Institutions2.5

2.5.1HIGHLIGHTS

FINANCIAL RELATIONS WITH LOCAL AUTHORITIES AND THE STATE (Euro/000)

LOCAL AUTHORITIES 2008 2009 2010

IRAP (Regional Business Tax) 545 648 935

Waste disposal tax 42 39 39

Utility taxes and surtax 22 52 59

ICI (Local Property Tax) 140 140 150

Advertising tax 9 9 8

Other taxes due 11 10 19

TOTAL 769 898 1,210

STATE 2008 2009 2010

IRES (Corporate Income Tax) 3,419 1,953 2,571

Customs duties 380 276 395

VAT on gifts 57 44 66

Capital transfer tax and excise licences 4 11 19

Other taxes due 7 11 10

TOTAL 3,867 2,295 3,061


Call for tenders Characteristics

ENERGY CALL FOR TENDERS IN THE REGION OF UMBRIA

Requalification and energy saving investments in implementation of the 2007-2013 R.O.P. ERDF. “Support for the introduction of energy efficiency measures and investments”. EC regulation no. 800/2008 of 6th August 2008 and Prime Minister’s decree of 03/06/2009 published in GU no. 131 of 9th June 2009 (limited aid amounts).Investment proposed: 2,341,000 euros.Contribution assigned: 500,000 euros on a capital account. State of progress: investment concluded (reporting in progress, financing expected in 2011).

FIT (TECHNOLOGICAL INNOVATION FUND)MINISTRY OF ECONOMIC DEVELOPMENT

Development of product innovation programs in the areas with technological priority for the technological innovation fund. Law no. 46 of 17th February 1982 – directive of 16th January 2001 and related ministerial decrees. Three-year duration of project: 01/03/2008 - 25/02/2011. Reporting: from 01/03/2008 to 31/07/2010 for 2,323,000 euros (of which 1,852,000 for precompetitive development and 471,000 for research).Allowed project cost: 3,261,000 euros, of which 2,724,000 for the implementation of the precompetitive development program and 537,000 for the research program.Relief: 10% free grant, 80% low-rate loan, 10% ordinary loan.State of progress: project to be completed in February 2011.

ENVIRONMENT CALL FOR TENDERS (2007-2013 R.O.P.) REGION OF UMBRIA

Investments to support companies in ecological innovation and to reduce pollutants.2007-2013 ROP ERDP of the Region of Umbria. Approval of tender for support of companies in ecological innovation. Contribution requested: 291,000 euros on a capital account.State of progress: project approved. Alcantara S.p.A. top of list.

The company has a tax dispute in progress with the Italian tax authority for the 2003/2007 tax period. Alcantara S.p.A. received a favourable sentence for the first year of the debate, from both the Provincial Tax Committee (28/09/2009) and the Regional Tax Committee (05/11/2010). Following this dispute, on 16th December 2010, a mortgage was taken out on the Milan headquarters building by Equitalia Esatri S.p.A. for a sum of 1,508,000 euros. It is pointed out that this mortgage is not executive in that the company obtained a suspension from the Provincial Tax Committee of Milan on 20th December 2010.

SOCIAL SUSTAINABILITY 3

48 349

Staff Management Improvement Targets

representatives, staff, etc.).

by the role covered following the change in generation.

Human Resources 3.1

HIGHLIGHTS

Training

2008 2009 2010

Total (hours/employee) 55 64 54

Enviroment Health and Safety (hours/employee) 10.9 34.1 10.4

Tot. costs (Euros) 56,713.00 30,632.99 67,526.76

Accident table: gravity – rate of injury

Number of injuries with absence

Number of days lost

Hours worked

FREQUENCY index* number of injuries/hours worked x 1,000,000

GRAVITY indexDays of absence due to injury / hours worked x 1,000

INCIDENCE index Number of injuries/number of employees x 100

2008 0 0 525,824 0 0 0

2009 2 21 461,991 2.16 0.04 0.66

2010 1 2 504,700 1.98 0.004 0.34


to cover more than one position

* The total frequency index also includes medications without loss of capacity to work

50 351

Staff Management Policies

Alcantara S.p.A. considers the quality of its human assets to be the main resource for achieving its strategic aims. A fundamental element is the assumption of responsibility on all levels, which is the result of the relationship between the workers and their bosses. This aspect will be further strengthened during the course of 2011 through operations aimed at the career development of managers. With regard to the work positions, flexible skills will be developed and technical skills will be consolidated following the change in generation.

Alcantara S.p.A. pursues the growth and motivation of its entire staff through:communication of the objectives and their meaning;control and feedback on the results obtained;teamwork and knowledge of company processes;

training plans aimed at career development on all levels;remuneration policies that guarantee internal equity, competitiveness with the

market and recognition of the results obtained.The human asset strategies are pursued through the definition of annual operational plans, the development of which is systematically monitored through the company meeting system.In 2010 Alcantara S.p.A. elaborated a new procedure for managing the applications and selection of staff when selecting external staff or making internal transfers, in order to increasingly guarantee transparency and objectiveness in analysing the applications.

Composition of Staff and Turnover

On 31st December 2010, Alcantara S.p.A. had a staff of 357, of whom 62 working at the Headquarters in Milan and 295 at the production plant and research centre in Nera Montoro (TR).

87.7% of the staff are permanent; the remainder (12.3%) are temporary, employed mainly with apprenticeship contracts applied to new hires on the production lines, which, up to now, have always been taken on permanently at the end of the training/trial period, following a positive assessment of their performance. Only a few members of staff are part-time and account for 1.4% of the entire staff.

Alcantara S.p.A. has a stable trend in the number of employees without any variations other than those due to the normal turnover of retirements and new hires.At its headquarters in Milan, however, the number of staff has been reduced with respect to 2009 (from 70 to 62) following the rationalization of activities through the introduction of a new information system; Alcantara S.p.A. has also made use of a voluntary transfer procedure, the result of a trade union agreement, which involved 7 persons from the headquarters in Milan.At the production plant and research centre in Nera Montoro, on the other hand, the staff has increased in number (from 265 in 2009 to 295 in 2010). In place of staff going into retirement, Alcantara S.p.A. has taken on other resources with a view to improving the professional mix of its staff.

Most of the company’s human resources live in the areas around their workplace (over 93% of the staff working at the production plant and research centre reside in the province of Terni, while 67% of staff working at the Headquarters reside in the province of Milan). The hiring of local workers at the production plant and research centre of Nera Montoro, in particular, represents a concrete response to the need for employment in the area. 70% of the senior managers live in the province of Milan and the remaining 30% comer from neighbouring provinces; as far as the industrial plant in Nera Montoro (TR) is concerned, 100% of the senior managers live in the province of Terni.

Staff on 31st December 2010

Number2008 2009 2010

Men Women Men Women Men Women

Top management 16 1 15 1 14 1

Middle management 40 9 39 9 37 9

Employees 60 38 58 37 61 33

Factory workers 196 9 188 9 193 9

TOTAL 312 57 300 56 305 52

369 356 357

Number2008 2009 2010

Men Women Men Women Men Women

Permanent staff 274 56 261 55 262 51

Temporary staff 38 1 39 1 43 1

Full-time staff 312 55 300 55 305 48

Part-time staff - 2 - 1 - 4

Turnover (total outgoing movements)

2008 2009 2010

Men 22 12 16

Women 5 3 6

TOTAL 27 15 22

3.1.1

3.1.2

52 353

In 2010, the number of workers that left the company was 22, divided up as follows: 5 resignations, 10 retirements, 5 early retirement agreements following the rationalization plan implemented at the Headquarters in Milan, 1 dismissal, and 1 fixed-term contract not renewed at the end of the project. The details by sex, age and geographical area are indicated in the table below:

In 2010, the distribution of staff by age groups presented no significant changes with respect to 2009; the average age recorded at the Headquarters in Milan dropped from 42.44 years in 2009 to 41.82 years in 2010 while, at the production plant and research centre in Nera Montoro, the average age increased slightly from 39.46 years in 2009 to 39.91 years in 2010.

Diversity and Respect of Human Rights

The company has never committed overt or veiled discrimination in its staff management. This approach is supported by the possibility of presenting claims to the Oversight Committee, even in anonymous form.Alcantara S.p.A. is also sensitive to equal opportunities, despite the fact that it operates in a production and industrial environment, which has always been characterized by the presence of a much smaller number of women than men by history and tradition. Female staff are not assigned physically demanding tasks, work shifts in particular. The distribution of staff according to sex has remained substantially unchanged with respect to 2009 (14.56% of the entire company is composed of women) although there has been a slight reduction in female staff in the employee category.

Alcantara S.p.A. fully respects and conforms to the legislation in force, also with regard to promoting the hiring and working integration of staff belonging to minority groups.

Incentive and Remunerations Systems

Alcantara S.p.A. promotes the management and motivation of staff through incentive and development policies and measures. On a yearly basis, operations not originating from organizational and/or automatic contractual provisions are defined and planned with a view to recognizing the skills expressed on an individual level.

Pay rises are given on the basis of consolidated professional growth and the acquisition of distinctive skills within the company role assigned, while lump-sum bonuses are paid to staff that obtain or contribute to obtaining results that go beyond the targets set and are significant for the company. There are also promotions that take place along career development paths and transfers to higher positions.The company also has a variable retribution system associated with the achievement of the economic and performance targets set both on an individual and a team level. Every year, top management identifies the figures most directly involved in reaching these targets, who receive a money bonus in proportion to the degree to which these targets were reached.

Milan Nera Montoro Total Average age

New contracts for men in 2010 3 17 2028.04

New contracts for women in 2010 2 0 2

Terminated contracts for men in 2010 5 10 1549.95

Terminated contracts for women in 2010 6 1 7

Subdivision of staff by academic qualification

YEAR 2008 2009 2010

Middle school qualification 48 44 36

High school diploma 241 236 243

Degree 80 76 78

TOTAL 369 356 357

Subdivision of staff into age groups

2008 2009 2010

Number <30 30-50 >50 <30 30-50 >50 <30 30-50 >50

TOTAL 75 220 74 71 213 72 74 219 64

Staff belonging to minority groups

2008 2009 2010

No. of employees belonging to minority groups 34 32 30

% minority groups with respect to total number of employees 9,2 9,0 8,4

Type of incentive operation Number of operations

M.B.O. and lump-sum bonus 63

Pay rise 18

Promotion to higher employment level 69

Conversion to permanent staff 13

Total 163

3.1.3

3.1.4

SOCIAL ACCOUNTABILITY PROJECT - SA8000In 2007, Alcantara S.p.A., which has always been sensitive and committed to the respect and safeguarding of human rights, decided to continue along its ethical path, by making its internal management system conform to the requirements laid down by the SA8000 standard, that is, the international standard through which an organization subjects its Social Responsibility Management System to certification by a third party. Alcantara S.p.A. obtained SA8000 certification in October 2008.In 2010, in compliance with the standard and following the renewal of the Trade union representation contracts, a new SA8000 Workers’ Representative was appointed both for the production plant and research centre in Nera Montoro and for the Headquarters in Milan. For the new representatives, Alcantara S.p.A. formalized and implemented a specific training course so as to guarantee the best conditions for them to carry out their activities. All company staff have been informed about the spirit and principles of the SA8000 standard during specific training courses and at special meetings. In addition, every new hire attends a specific day of training on company certifications, with particular reference to the SA8000 standard and how it is applied at Alcantara S.p.A.

54 355

Top management, all other managers and the key figures at Alcantara S.p.A. are included in a variable incentive plan and are consequently assessed annually on the basis of the results obtained. The middle management not included in the variable incentive plan is assessed on the basis of the responsibilities managed within the scope of the relationship between the workers and their bosses.

Training and Valuation

Training is systematically included in Alcantara S.p.A.’s strategic plans and is considered indispensable tool for building, developing and consolidating professional skills and knowhow.The staff on all levels are directly involved in training initiatives/plans, especially in case of:

professional profile;

In 2010, at the industrial plant of Nera Montoro, the training activities focused on the development of technical and legislative skills in the quality, health, safety and environment sectors, plant engineering development and procurement. Training also included the “Flexibility Project”, whose aim was to create work figures capable of covering more than one job position. Training for the insertion of new hires with an apprenticeship contract in the production environment was also continued.

In 2010, at its Headquarters, training focused above all on the issues regulated by Italian Legislative Decree 81/08 and the new aspects introduced by the Italian Legislative Decree 106/09, which completed and amended decree no. 81/08. In 2010, in particular, training was also given to the company’s entire staff on Italian Legislative Decree no. 231/2001 and the Organization and Management Model, the Code of Ethics, the 2009 Sustainability Report and the “Carbon Neutrality” project. The details of the training given in 2010 to employees on policies and procedures concerning significant aspects of human rights for the activities of Alcantara S.p.A. are given in the table below:

Comparison between average salaries: report by sex and with respect to the minimum contractual salary

MEAN GROSS ANNUAL SALARY OF MEN

MEAN GROSS ANNUAL SALARY OF WOMEN

% DIFFERENCE BETWEEN WOMEN AND MEN

TOP AND MIDDLE MANAGEMENT

72.123,40 55.792,40 -22,64

EMPLOYEES 30.817,40 31.133,60 1,03

FACTORY WORKERS AND APPRENTICES

22.993,20 24.115,70 4,88

MEAN MINIMUM SALARYMEAN ALCANTARA

SALARY% DIFFERENCE

1.643,48 2.323,67 41,39

2008 2009 2010

Hours/employee 55 64 54

Costs (Euros) 56,713.00 30,632.99 67,526.76

Total number of hours of training given 20,151 22,843 19,108

4,468 11,542 7,227

8,663 - 5,960

2,933 141 1,636

4,039 12,128 3,708

48 32 577

Nera Montoro (hours)

No. workers involved

Milan (hours)No. workers

involved

Health, Safety and Environment procedures and standards

448 12 6 3

Sustainability project and SA8000 380 192 11.5 4

Model 231 228 29 24 12

New INTRANET (holiday, business trip management, etc.)

93 89 41.5 19

Total 1,149 322 83 38

3.1.5

Since 1995, there has also been a variable productivity bonus, as laid down in the reference National Labour Collective Agreement (CCNL), which is discussed and stipulated with the trade union representatives on a yearly basis. In 2010, the productivity and profitability targets for the productivity bonus were agreed upon with the Trade union representatives. The bonus will be paid during the month of February 2011 (97% of maximum agreed value) following the final balance of the economic and productive results of the year 2010.

56 357

Industrial Relations

Alcantara S.p.A.’s objective is to consolidate a positive and constructive system of industrial relations on all levels consistent with the strategic, organizational and cultural developments of the company and based on maximum transparency, in a participative environment.On this basis, Alcantara S.p.A. maintains and develops relations with the workers’ representative organizations, based on mutual respect of the roles, skills and responsibilities of each worker with a view to qualifying the participation process better and preventing conflicts from arising.

The percentage of staff who are members of a trade union is stable at about 70%, which shows that membership has never been discouraged in any way. In fact considerable space has been given to bargaining with the workers’ representative organizations through a continuous, open dialogue between the company and the trade unions.

Staff trade union members

Number 2008 2009 2010

% of members (with respect to total) 69 69 69

% of non-members (with respect to total) 31 31 31

3.1.6

RESPONSE TO THE ECONOMIC CRISIS: OUR 2010 COMMITMENTAlcantara S.p.A. had to face the economic crisis that affects its reference markets also in 2010. Despite a recovery in sales volumes, the 2008 levels were not reached. In any case, the company respected its commitment not to cut staff, managing periods of overcapacity through measures agreed upon with the trade union representatives, such as the using up of residual holidays, the development of an operational flexibility plan and the training necessary to implement it, without having to use employment support legislation. The available staff was also used to carry out activities that would normally be outsourced. The staff that reached retirement age were replaced by new hires with a view to strengthening the structure to be ready for when the markets recover.In particular, in 2010, the following agreements were stipulated:

of doing the work of more than one job position, thus enabling the company to move better with market peaks and to rationalize energy consumption and the employees to be employed more continuously during the year and increase their skills;

down in Italian Legislative Decree no. 81/08 on health and safety.

58 359

From an analysis of the statistics, with respect to the three year reference period divided by the textile, chemical and total values, the value of the frequency index (IF) of the injuries is well below the national average.

The gravity index (GI) represents the invalidating consequence of the injury and indicates the number of days lost per injury; it has a value of zero for 2008, 0.04 for 2009 and 0.004 for 2010.

Alcantara S.p.A. is aware that prevention and continuous improvement are concepts that imply cultural changes and proactive approaches and this is why it continues with its consolidated measures that keep the “health and safety” system alive and dynamic and involve staff on all levels:

Health and Safety

Alcantara S.p.A. is strongly committed to preventing and minimizing the potential effects of its processes and products on health, safety and the environment.This commitment is based mainly on its will to make all its staff feel responsible, thus increasing their competence and awareness.Monthly meetings are held at the production plant and research centre (area meetings, monthly meetings with management and first and second-level managers) involving about 15% of workers.

The daily risk prevention measures help to safeguard the health and safety of the entire staff. In particular, this commitment is expressed through:

and communication activities outside the company.

Over the past few years, the accident trend has recorded a constant, positive decrease and the gravity of the accidents has also decreased considerably.

3.1.7

Identification of the risk factors and continuous improvement measures taken with a view to eliminating or reducing the risk of harmful events are witnessed by a complete review of the “Risk Assessment Documents” both for the production plant and research centre in Nera Montoro (October 2010) and the Headquarters in Milan (November 2010).

Frequency index

0

25

20

15

10

5

2007

1,9

2010

1,9

2008

0

2009

2,1

no. injuries X 106

hours worked

Textile industry

10,3

Chemical industry

9,1

Total industry

19,3

Data consolidated in the three-year period 2007-2009(industry and services)

2 11

If =

60 361

Internal Communication and Staff Satisfaction

Alcantara S.p.A. takes care to listen to and dialogue with its workers with a view to establishing relationships of collaboration between the persons, thus increasing the feeling of belonging and the distribution of the company’s values and culture.

Alcantara S.p.A. has defined some benefits for the entire staff. These include:

on presentation of certifications indicating the services received;

For each of these initiatives, Alcantara S.p.A. directly bears its proportion of the costs.At the production plant and research centre in Nera Montoro there is a recreational club, which organizes cultural and sports events.

3.1.8

ANALYSIS OF THE COMPANY CLIMATEAn analysis was conducted in 2010 with a view to gaining a better understanding of the employees’ perceptions of the company climate. The activity was carried out completely by an external company with expertise in this sector, which administered a questionnaire to all staff wishing to express their opinion voluntarily and in anonymous form. Nearly all employees working at the headquarters (98%) and 62% of the employees of the production plant and research centre expressed their perception of the company climate. The aspects assessed were:- their actual work environment- their feeling of belonging to the company - communication- training- motivation of staff- the tasks and the organization- interpersonal relationships - pay / bonusesThe results were illustrated to the company’s managers and the trade union representatives at the plant of Nera Montoro at 2 separate meetings held on 05/10/2010.The presentation was then extended to all workers at the production plant and research centre that took part in the Safety Day on 27/10/2010. At the Headquarters in Milan, the results were illustrated to the managers on 3/11/2010 and the entire staff on 8/11/2010. A corrective action plan was identified with a view to improving the least satisfactory areas. The plan was approved by management and implemented in the operational plans starting from the year 2011. The plan will be developed over the next few years in line with the budgets approved and will, in particular, be aimed at improving the work environment, communication and staff motivation.

“ZERO INJURIES” PROJECTThe aim of the “Zero injuries” project is to identify further room for improvement in safety management and, more specifically, to tend towards the “Zero Injuries” target. Over 4 years after the start of the project (June 2006 - December 2010), a considerable improvement from the technical and operational viewpoint has been recorded due, among other things, to the use of the following tools:

Safety proposals: practical proposals for the improvement of Health, Safety and the Environment that every worker made to company management and for which the same worker must find an adequate response (whether positive or negative). In 2010, compared with a target of 290 Safety Proposals, the workers submitted about 320 Safety Proposals; since June 2006 over 1,300 Safety Proposal have been made and about 1,000 of these have been implemented.

Total Approved Implemented In progress To be done % implemented

2008 S.P. 283 254 254 0 0 100

2008 risk assessment 242 222 222 0 0 100

2090 S.P. 234 217 191 7 19 89

2010 S.P. 313 212 83 49 80 39

Total 1324 1117 962 56 99 86

Near misses: reports from employees of potentially hazardous situations that could lead to injuries. In 2010, 88 near misses were reported, analysed and solved, almost 250 since June 2006.

Safety Patrol: periodic internal audits, with a view to controlling the tidiness and cleanliness of the work environments, the correct use of personal protective equipment (PPE), etc. The Safety Patrol teams work across the entire organization, thus enabling all the areas of the production plant and research centre to be patrolled and the entire staff to gain greater competence in safety issues.

Work groups: constitution of specific work groups for each functional area. This tool has led to widespread participation of the entire company staff.

Summary of the results of the “Zero injuries” project

Summary of near misses Reported Approved Cancelled

2006/2009 near misses 159 159 0

2010 near misses 88 88 0

TOTAL 2006 – 2010 247 247 0

62 363

Customers 3.2

HIGHLIGHTS

Description (euros/000) 2008 2009 2010

Finished product sales 81,645 63,344 77,110

By-product and different material sales 912 706 738

Total net sales 82,557 64,050 77,848

Finished product sales in square metres 3,607,790 2,783,957 3,428,006

The sales figures present marked increases both in value and in volume, with a percentage of over 20%.


® EXO line of products

Italy14% UE

72%Extra UE14%

2010 sales Germany55%

France11%

2010 EU SALES

Great Britain 4%

Portugal 4%

Poland5%

Other7%

Spain7%

Czech Rep.7%

Usa32%

Russia3%

2010 EXTRA-EU SALES

Switzerland13%

Mexico5%

Japan25%

Turkey6%

Hong Kong3%

Other8% South Africa

5%

64 365

Customer Relationship Management Improvement Objectives

environment

- Penetration of non-European markets through collaboration with local manufacturers (in USA and India) and with the production plants of European partners (USA, China and Brazil);

- Cooperation with industrial partners in initiatives aimed at promoting the Alcantara® brand alongside the partners themselves, through actions designed for the specialists in the sector and the end customers.

- Consolidation of the broadened offer by placing alongside traditional Alcantara® the technical and stylistic variations developed in time. The objective is to be pursued along two separate channels: distribution and direct customers;

- Confirmation of the relationships with the partners who guarantee a similar image and style to those of Alcantara® in the furniture sector.

- Development of the brand repositioning process through activities carried out in collaboration with prestigious partners in Italy and overseas;

- Adequate information for young emerging stylists on the infinite possible uses of Alcantara® and the development of special projects in partnership with some of them;

- Preparation of actions for developing the sale of new stretch and dye-ready materials;- Optimization of the sales network.

Marketing Policy and Innovation

In 2010, Alcantara S.p.A. continued its innovation policy in order to offer new products from the technical and stylistic viewpoints, thus enriching its offer portfolio and working in partnership with its customers. In fact, Alcantara S.p.A. intends to improve the level of service offered through technological innovation and a customized proposal. In particular:

terms of European standards during 2010 so as to respond positively to the requests coming from these two particularly selective and competitive markets. In particular, a new family of products, called Alcantara® EXO, has been produced for use outdoors under humid or even wet conditions;

Alcantara® Interiors collection: a variety of products and colours, organized like an editorial selection and designed for the furniture market, which represents an effective example of stylistic differentiation. Conformance with many European standards, in terms of safety and quality of the products in the collection, enables their use even outside the Italian market.

Characteristics and Analysis of the Customers

The main sectors of business in which Alcantara S.p.A. operates are: automotive (70%), fashion and accessories (12%), furniture (which includes interior, contract and yachting and corresponds to 18% of sales).

Alcantara S.p.A. approaches the reference markets along two main channels: direct contact: sale to the customer;indirect contact: agents and distributors, selected by the company, contact the potentially significant areas of the market directly.

3.2.1

3.2.2

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AUTOMOTIVE

Target customersThe Alcantara® offer is designed for car manufacturers, while the direct customers (those who process the material and to whom Alcantara S.p.A. delivers and makes out invoices) are System Suppliers.

Characteristics of the marketThe car industry lays down particularly strict quality standards. European customers represent 95% of the manufacturers present on the reference market. Their loyalty towards Alcantara® is witnessed by continuous involvement in new projects. Over the past three years, German manufacturers have become the leading end market, reaching a market share of nearly 70% in 2010.

Advantages of Alcantara®

Some of the machining processes typically carried out by System Suppliers are performed by Alcantara S.p.A. in order to shorten the supply chain and get closer to the customer (the car manufacturer), ensuring higher quality and lower costs.

Management approach Direct contact:

Indirect contact:

importers.

FASHION & ACCESSORIES

Target customersThe customers of the Fashion division are companies operating in the fashion and accessories sectors (bags, in particular) of the European market. An end market for fashion products is represented by the accessories for electronic goods (Smartphone holders, tablet holders, etc.).

Characteristics of the marketThe main end market is Europe and, in particular, Italy, France, England and Germany, that is, the countries with the largest number of major fashion brands. In 2010, the Fashion division collaborated with about 800 customers operating mainly in the top range (luxury sector).The business sectors are fashion, which accounts for about 50% of the volumes sold, and accessories for the remaining 50%.


The continuous technological evolution and research work carried out in house have enabled Alcantara S.p.A. to add multi-colour printing and dyeing to the numerous machining processes already applicable to the material.


Indirect contact:

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Interior, Contract & YachtOver the past three years, the furniture and yachting end markets of Alcantara S.p.A. have been characterized by market loyalty of the key customers and a gradual loss of non-strategic customers. In the furniture sector, this trend is particularly evident on the French and Italian markets which, together with the German market, account for about 65% of the division’s sales. On the German market, in particular, high-range customers have been acquired or confirmed, and have gradually replaced the company’s traditional customers particularly badly struck by the economic crisis.

Product Sustainability and Safety

Alcantara S.p.A. is one of the first industrial companies to be awarded Carbon Neutrality certification. For Made in Italy companies, this means quality, respect of the strictest standards, avant-garde technology and attention to style; sustainable means respect of the economic, social and environmental balance.In order to achieve this balance and satisfy the increasingly demanding ethical, social and environmental needs, Alcantara S.p.A. has set up a voluntary path of sustainable development the results of which, in terms of continuous improvement, enable it to offer a safe product that respects the environment.

On its main markets, furniture and automotive, Alcantara S.p.A.’s sustainability offer is implemented by the leading and most prestigious customers, above all in terms of:

processes) but also in corporate policy as a whole.

INTERIOR, CONTRACT & YACHT

Target customersThe customers are leading residential furniture companies and distributors, for the potentially significant regions.The contract customers (public areas, hotels, etc.) are, on the one hand, Architecture and Design firms and, on the other, specialised companies (Contractors). The customers in the yachting sector are both ship builders for large ships, which work in close collaboration with specialized Architecture and Design firms and ship fitters, and the leading brands for the production of yachts.

Characteristics of the marketThe “tailor made” offer is at the basis of the success in the relationship with the Key Customers in the Interiors sector.With regard to the Yachting and Contract sectors, the certifications are the greatest barrier to entry. The ability to offer a comprehensive, rapid and prompt service (as early as the sampling phase) is fundamentally important.


Alcantara S.p.A. works in partnership with major customers, from the production of furniture to its distribution to the points of sale, communicating the characteristics of the product to the end customer in a joint and targeted way.For the Yachting and Contract sectors, the Alcantara® materials are tested and approved on the basis of the legislation in force in every country.


Indirect contact:

3.2.3

In particular, Alcantara S.p.A.’s offer has the following strong points:

plant situated near the production plant;® has been 100% Carbon Neutral: this means that it has defined, reduced and offset

all the CO2 emissions coming from its entire production process, from cradle (production of raw materials) to gate (delivery of the material to the customer);

® is easy to clean and scratch-proof (easy-care and self-care);25% in weight of after-use recycled raw materials are available;

(REACH);® conforms to the customers’ supply specifications and has the certifications required by the

reference markets (see paragraph 1.2.3).

In 2007, the company set up a committee chaired by the CEO for the periodic evaluation of Product Liability. The Committee meets up when there is a need to put a new product on the market, in order to critically assess all related risks.

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Alcantara S.p.A. takes care to guarantee the health and safety of its consumers and provides accurate information on the labelling of its products. In particular, the Oeko-Tex label of Alcantara® ensures the end consumers that there are no risks for human health, in conformance with the provisions laid down by the Oeko-Tex Standard 100 (see paragraph 1.2.3) , in the contract phase Alcantara S.p.A. provides the customer with all the relevant information about its products and the labelling (composition, washing instructions, care and maintenance in time, abrasive strength, etc.) and the training necessary to use the material correctly.

Customer Satisfaction and Quality Management System

Alcantara S.p.A. is strongly oriented towards customer satisfaction and measurement of this satisfaction by listening to and communicating with the customer through the area managers, project managers and persons responsible for the stylistic development of the product. Dialogue gives rise to a continuous improvement of the procedures, interfaces and response times.

Every year, Alcantara S.p.A. conducts a critical internal analysis (Customer Satisfaction Review) designed on the basis of the “customer-supplier” model, in which the area managers and project managers act as spokesmen towards the company.

Within the scope of the Customer Satisfaction Review, the customer satisfaction is measured through three indicators:

completed or replaced by a qualitative analysis of the events that led to the customers’ dissatisfaction (TGW Analysis – Things Gone Wrong Analysis), particularly useful for identifying the continuous improvement activities in a setting of innovation and, in particular, the “tailor-made” offer.

3.2.4

Quality Management SystemAlcantara S.p.A. guarantees the quality of its products through numerous certifications (see paragraph 1.2.3). From the operational point of view, all the phases of the customer relationships are described in the Management Manual developed in accordance with the UNI EN ISO 9001:2008 standard.

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In terms of “non-quality” reports, the complaints received from the customers represented only a small percentage of the total sales and a further, gradual improvement with respect to previous years.In 2010, the Things Gone Wrong analysis showed a significant improvement with respect to the previous year in terms of the number and gravity of the critical events in the interface with the customer, despite the considerable increase in the absolute amount of technical/stylistic development activity.

With regard to the continuous improvement, in 2010 Alcantara S.p.A. concentrated its efforts on increasing the efficacy of the process for planning and creating technical and stylistic prototypes. During the course of 2010, this process was activated 151 times, obtaining full customer satisfaction in terms of efficacy and, in particular, procurement times.

In 2010 Alcantara S.p.A. consolidated the application of a planning tool introduced in 2009 to optimize the time to market of the customized stylistic development.

Alcantara S.p.A. is also willing to subject its Quality Management System to periodic audits by customers and/or system suppliers, typically in the automotive industry.

In 2010, the analysis of the Customer Satisfaction measurement indicators revealed a further improvement with respect to the year 2009. In terms of level of service to the customer (On Time Shipment), the year 2010 recorded, for the second year running, the best result since the start of the order cycle management process rationalization project.

AUDITS BY CUSTOMERSThe feed-back received and the direct audits conducted by customers (mainly System Suppliers in the car industry) revealed positive overall assessments, confirming Alcantara S.p.A.’s classification as a “Class A – A/B preferred supplier”.

Improvement in “On-time shipment” level of service (% of total shipments)

Improvement in “Non-machined goods” complaints (% of total sales)

0,3

0,4

0,2

0,1

0

0,35

0,45

0,25

0,15

0,05

Target

0,42

0,17

0,2

2008 2010 F 20112009

0,24

Improvement in “Machined goods” complaints (% of total sales)

0,3

0,2

0,1

0

0,35

0,25

0,15

0,05

Target

2008 2010 F 20112009

0,29

0,16 0,15 0,15

99,50

98,50

97,50

100,00

99,00

98,00

97,002008 2010 F 20112009

Target99,05

99,48 99,55 99,50

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In addition, in line with the strategic distribution requalification project, the company planned a campaign to promote the “selected dealers” of Alcantara®, in the principal national and overseas media outlets. Other significant initiatives include:

Collaboration with 10 internationally famous designers and companies who presented the material at the Milan Furniture Show;

scouting of young emerging stylists and participation in Who is on Next? 2010. The main means of communication used by Alcantara S.p.A. towards its own customers are participation in events and trade fairs, articles and advertisements in the major media outlets – on a local, national and international level – and the internet site.In 2010, the number of persons who visited the internet site were 287,398 of whom 255,679 were single visitors.

Alcantara S.p.A. takes part in events and activities in several fields. Traditionally sensitive to the world of art, during the course of 2010, the company confirmed its presence at Mint (Milan Antiques and Modern Art Fair), by setting up a lounge area. It did the same for the Rome Contemporary Art show.

The Research Centre and New Products

Every year, Alcantara S.p.A. invests between 3% and 5% of its turnover in research and possesses the only Research Centre in Europe for the development and continuous improvement of its own type of products and processes. This choice constitutes one of the company’s strong points and is determined by its awareness that continuous experimentation and renewal constitute the only way of keeping “one step ahead” and meeting future market needs.

In line with its policy, the development of new products for Alcantara S.p.A. is closely linked to social, economic and environmental performance. The innovation generated by sustainability affects the production facilities, the product, the process, procurement, logistics, and communication, thus creating an authentic business model. It is for this reason that the Research and Development Department is constantly committed, on the one hand, to the discovery of processes and products suitable for the market (proactive offer), and, on the other, to the search for specific solutions for the customer (on demand in accordance with a customer brief), which are in line with Alcantara S.p.A.’s sustainability policy. To this aim, it uses the skills and work of the Application Development Centre and Stylistic Department.

Communication and Events

Communication of the values of the product and the Alcantara® brand lies at the centre of the collaboration with its customers/partners. The company’s distribution contracts include a section specifically dedicated to this topic. In its daily marketing relations with key customers, Alcantara S.p.A. educates the customer and his sales force to communicate the material correctly, using a series of tools (Alcantara® vocabulatory, palettes and technical data sheets, special leaflets as in the case of sustainability) and, in the furniture sector, by checking what is sent to the points of sale through mystery shopping activities.

Participation of Alcantara S.p.A. in fairs and shows in 2010

Sector Fairs or shows

FashionMilano Unica (in Milan in February and September) and Première Vision (in Paris in February and September), as well as its presence at the stand of its distributor during the Munich Fabric Start fair.

Interior

Maison & Objet (in Paris in January) and Orgatec (in Cologne in October – every two years). During the Furniture Show, Alcantara S.p.A. takes part in the Fuorisalone di Zona Tortona with ad hoc projects and

® Design Museum was presented at Superstudiopiù in via Tortona.

Automotive

Alcantara® is present in the interiors of the cars on display at the main car shows, from Frankfurt to Geneva and Paris, not to mention the Bologna Motor Show. In October, the company took part in “Viva l’auto”, an annual meeting between Italian journalists in the automotive sector to name the European car of the year. For this prestigious event, an Alcantara® lounge was set up as an area for press conferences.

During the course of 2010, Alcantara S.p.A. confirmed its commitment to sustainability related communication initiatives. In particular, it took part in Cittàdellarte, a large experimentation workshop promoted by the artist Michelangelo Pistoletto and the director of Vogue, Franca Sozzani, to encourage the use of sustainable materials in the fashion world.

3.2.5

3.2.6

RESTYLING OF THE BRANDDuring the course of the year, the communication activities were oriented towards a strengthening of the identity of the brand. In relation to this, Alcantara S.p.A. proceeded to restyle the Alcantara® brand, giving it a more modern look.

In October 2010, the new product Alcantara® EXO was presented at the 50th International Boat Show in Genoa. Based on the technology developed for the car interior sector and designed to increase the resistance of its colours to the light, in turn combined with treatments designed to increase the water repellence and impermeability of the product, Alcantara® EXO paves the way to an application of the product in outdoor furniture.

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Community Relationship Management Improvement Objectives

through activities associated with the protection of the environment.

and other socially and/or environmentally oriented organizations.

imagine?”

particular, to work on the new web site, in line with the restyling of the Alcantara® brand and the orientation towards the company’s sustainability.

Community Relationship Policies

Alcantara S.p.A. has always taken care to dialogue continuatively with the community on the basis of criteria of transparency and fairness and to spread its sensitivity to sustainable business and community development, encouraging the collaboration of the communities in reaching this ambitious objective.

The “Community” structure of Alcantara S.p.A. is made up as follows: at the Headquarters in Milan: the local associations (Zona Mecenate, ADI – Industrial Design Association, National Chamber of Italian Fashion, Material Connexion), the trade associations, the world of the press and media in general. Alcantara S.p.A. also collaborates actively with university institutions such as Berlin University, the IED (European Design Institute) and the Polytechnic of Milan. Through communication with the end customer, the company speaks mainly to “design lovers” who choose the material to cover the objects that they keep around them in everyday life, while the professional communication puts the company in contact with designers, project leaders, stylists and all those who use Alcantara® in their own creations.at the production plant and research centre in Nera Montoro: Alcantara S.p.A. dialogues with the institutions and develops initiatives with a view to supporting the local community. The company represents a major actor deeply rooted in the area and a point of reference for many workers and families.

The Community 3.3

HIGHLIGHTS


50th International Boat Show in Genoa, Convivio, Amici dei Bambini organization

Department – University of Perugia, Department of Material Engineering and Production – University of Naples, European Design Institute, MittelModa

3.3.1

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Activities in the World of Research and Creative Innovation

In the field of university research, in particular within the scope of “High-performance products for car interiors” project, Alcantara S.p.A. has commissioned part of its research activities to third parties, by establishing relationships of collaboration with:

Remaining in the university environment, during the course of the year, a relationship of collaboration was established with the Berlin University of the Arts, which organizes a degree course on the artistic and applicational potential of material.

For many years, the company was on the Board of Directors and it is currently on the jury of MittelModa, one of the most prestigious International competitions held to discover new talent in the fashion world, and since 2007 it has been working with the European Design Institute in Milan (IED) with a view to presenting the evolution of the Alcantara® brand and communication to the students.

In some cases considered of particular interest, the company supports students with talent in the fields of fashion or interior design by supplying them with free samples of Alcantara®.

Relations with the Media

Alcantara S.p.A. uses the principal media outlets to notify the stakeholders of the initiatives taken, the innovations made and to provide all of the information necessary to perceive the company’s situation in the correct way. The means of communication chosen are mainly the print media (daily, weekly and monthly newspapers and magazines in the world of interiors, cars, fashion and lifestyle in general) and the web.

Articles and advertisements in the main media outlets are written on a local, national and international level. In particular, Alcantara S.p.A. produces its communication campaigns, with regard to the brand and the applications, mainly for the European market – Italy, France and Germany – and, in a specially designed way, for China and Japan.The company also invests in the web, specialized sites and portals above all for professionals, by producing banners, buttons and ad hoc advertorials based on the topic proposed. The press is monitored periodically by means of a digital print review service, which reads and assesses both the advertisements and the articles.

Contacts with the press, B2B and B2C, are kept by Alcantara S.p.A. both directly and through its print offices, in Italy (company press office and automotive press office), France and Germany, respectively. In 2010, the company established a working relationship with an agency that runs a press office and organizes events in China. The importance of the Chinese market for the company led to the organization of two events to present the material and its applications in the interior and automotive sectors.

The communities where the energy generation from renewable sources projects is located are also influenced indirectly.In fact, to offset the CO2 emissions produced by the company, it has obtained financing for other 3 projects which, under the protection of the UN, help to improve the conditions of the Earth from the economic, social and environmental points of view. After Honduras, New Zealand and India, this year, the projects financed will be implemented in Indonesia, Taiwan and Turkey. The projects concern plants that generate energy from renewable sources, in line with the company’s choice to use exclusively this type of energy for production activities.

Sponsoring and Free Gifts in Its Fields of Operation

Alcantara S.p.A. takes part in events and activities in several different fields, mainly by supplying furniture for communal areas and providing bags and other gadgets for the press kits of their customers and partners. These initiatives bring benefit to the community in terms of use of the service (e.g. lounge areas) and sensitivity to sustainable development.

June 2010

Alcantara S.p.A. supported the Shochiku Grand Kabuki event in Rome, a traditional Japanese play with a high cultural content. The event was attended by the Italian President of the Republic and other leading Italian and Japanese politicians.

Alcantara S.p.A. chose to support the Festival dei Due Mondi di Spoleto, one of the most important International events of music, art and show business. On that occasion, Alcantara S.p.A. fitted out the meeting Point of the Festival with a special display, characterized by unique materials designed by Cappellini.

July 2010Within the scope of the emerging talent competition Who is on next?, a project conceived and implemented by Alta Roma in collaboration with Vogue Italia, Alcantara S.p.A. provided the finalists of the 2010 edition with the material for making avant-garde clothes and accessories.

October 2010 Alcantara S.p.A. fitted out the hospitality lounge of the 50th International Boat Show in Genoa, at which the new Alcantara® EXO product was presented.

December 2010Alcantara S.p.A. also donated bags and pochettes at “Il Bello che fa Bene”, a famous event organized at Christmas time by the Ai.Bi. – Amici dei Bambini organization, supported by leading Italian and international luxury companies, who donated some of their most prestigious articles for the occasion.

3.3.3

3.3.43.3.2

The “Zona Mecenate” project represents Alcantara S.p.A.’s contribution to the development of the new centre of design creativeness in the Southeast of Milan, where the company’s Headquarters are located, used up to now exclusively as an industrial zone.“Zona Mecenate” is a creative community that is the result of the will of versatile professionals, operating in the sectors of creations, communication, architecture and design. Alcantara S.p.A., which is one of the three founding members and has been on the executive council since it was set up, contributes actively to the activities of the association, to whom it pays an annual membership fee. In 2010, work started on the creation of the first project: an “open air” show with some of the most significant pictures of the Caproni workshops in which numerous aeroplanes were built and which represents the centre around which the area has developed.

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The relationship with the press is continuous: on the one hand, press releases and press kits are produced for fairs, events and major innovative projects and, on the other, the company answers and fulfils the requests of the journalists for information, interviews and samples of material for the press services. Press days and appointments with the press are also organized on important occasions such as the Furniture Show.

Trade Associations

Alcantara S.p.A. supports many associations and/or institutions through its membership fee and direct participation in order to support the company’s representation and use the services provided by the associations.

3.3.5

List of associations of which Alcantara S.p.A. was a member in 2010

ADACI (Italian Supplier Ass.) ASSOTERNI

AIAS (Italian Safety Worker Ass.) AUSED

AICQ (Central-Northern It. Quality Ass.) NATIONAL CHAMBER OF FASHION

AILOG (Italian Logistics Ass.) CREDIT MANAGER

AIM (Italian Macromolecule Ass.) FEDERCHIMICA

MITTELMODA TEXCLUBTEC

AREAPELLE ADI (Industrial Design Association)

ASSOFIBRE MATERIAL CONNEXION

ASSOLOMBARDA

ENVIRONMENTAL SUSTAINABILITY 4

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Environment Improvement ObjectivesIn 2010, Alcantara S.p.A. made major investments to minimize the emissions in the atmosphere and reduce the consumption of energy, mainly electricity.In 2010, it also made major investments to rationalize the solvent emission reduction plants, guaranteeing solvent emissions equivalent to less than a quarter of the limits laid down by the law (25% of limits set for Integrated Environmental Authorization); for further details, see paragraph 4.9.The importance and efficacy of the investments in environmental improvement is witnessed by the fact that the projects received public financing in environment tenders (for further details, see paragraph 2.5.1 Government Financing).

HIGHLIGHTS

Trend of consumption with respect to an increase in production volume of over 20%:

2 emissions in the atmosphere: +6.5%


2 of the production process has been offset by means of an investment of 76,000 euros

the University of Viterbo

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Alcantara S.p.A. is actively committed to preventing and minimizing the impacts of its processes and products on the environment. This commitment is reflected through a series of actions that include:

The attention paid by Alcantara S.p.A. to environmental issues is witnessed by the significant awards received:Environment Management System in accordance with the ISO

14001:2004 standard, renewed in July 2010, which enables the impacts of the activities carried out during the phases of production to be kept permanently under control;Integrated Environmental Authorization (IEA) valid until 2013, has grouped in a single authorization all the previous authorizations on atmospheric emissions, wastewater, waste management following a regional services conference. The competent authority (ARPA) conducts periodic audits and tests on the plant to assess the respect of the requirements and the improvement obtained. The Authorization lays down that all investments, particularly those with an environmental impact, are to be checked and approved by the Competent Authorities (Province of Terni and ARPA), before they are implemented.

Alcantara S.p.A. has a Safety and Environment Policy that indicates the principles on which all the activities are based, the management approach and the operational responsibilities.

The following environmental improvement projects were also submitted and received Integrated Environmental Authorization following verification by the competent authorities:

Modern phytopurification plant for the management of waste and industrial wastewater, this project will give the following benefits:- Ecological restoration of about 7,000 m2 of surface area on the lid of some unused tanks of a dump with

over 2,500 plants with industrial wastewater rich in nutrients;- Reduction in the amount of pollutants treated in the Water Treatment Plant, with a consequent reduction

of the treatment products and sludge produced and an improvement in the characteristics of the wastewater;

Recovery of sludge in cement factories or other authorized plants, thus avoiding its transfer to dumps (sludge constitutes about 50% of the waste produced at the production plant and research centre of Alcantara S.p.A.), this recovery will be possible following the commissioning of the phytopurification plant planned for the year 2011.Optimization of the Wastewater Treatment Plant by carrying out operations in 2011 capable of guaranteeing an increasingly high quality of the wastewater, which is already well below the limits imposed by law;

Another improvement objective concerns the identification of and subsequent collaboration in a project that supports the valuation of the environment and biodiversity in the area around the production plant and research centre. Although there are no particular protected species living around the site, the aquatic or surface fauna and flora that may be affected by Alcantara S.p.A.’s activities may be identified.

The product CO2 neutralization study continues: whether the objective is reached or not will depend on the certification standard issued.

Environmental Policyand Management System

4.1

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The main types of environmental impact are correlated with the use of energy (taken from renewable sources), the storage and use of chemicals, atmospheric emissions, drainage into the river, waste production and management, the solvent use cycle, the use of natural resources and noise emissions.

In accordance with the provisions laid down in its certified Environment Management System, Alcantara S.p.A. has identified all the significant environmental interaction parameters concerning atmospheric emissions, the drainage of wastewater, noise pollution, waste, energy, water resources, soil and subsoil protection. These parameters are constantly monitored and assessed within the scope of the Management Review laid down by the system.

The integrated-cycle production of the material takes place at the production plant and research centre in Nera Montoro, in the province of Terni.

The Alcantara S.p.A. production process starts with two polymers from which the finished product is obtained through a series of phases. The material undergoes final transformation treatments according to the type of application for which it is to be used. At the production plant, use is made of raw materials and energy and the finished product is obtained as illustrated in the diagram shown below.

Environmental Impacts of Alcantara S.p.A.

FINISHED PRODUCT

Raw materialsEnergyWater

WastewaterWaste

ALCANTARA® PRODUCTION

PROCESSES BY-PRODUCT

Alcarene®

Alcanol®

SPINNING

FELT

ROUGH

DYEING

FINISHING

4.2

In addition to the audits conducted by the supervisory bodies, in 2010 Alcantara S.p.A. underwent a supplementary audit conducted by an independent third party to assess the environmental risk, which gave the following result:

currently valid;

still in progress but will be completed within the terms laid down by the authorization itself;

within the terms and using the methods laid down, and have provided results that conform to the limits laid down by the laws in force;

formal and regulatory viewpoints.

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Alcantara S.p.A.’s production process makes exclusive use of raw materials authorized by the strictest community standards. The potentially critical environmental and safety issues of all new products are assessed by means of an internal procedure that involves all company departments. The results of the assessment are examined by management before the marketing authorization is granted.All auxiliary raw materials, such as some of the thermoplastic polymers and sizes used, are treated on the site, recovered and reused in the production cycle or allocated to other industrial uses. All emissions and discharges are treated on the plant.

The production process produces two materials (by-products), whose quality is not sufficient for the production of Alcantara®; they are thus put on the market as raw materials and used in other production processes by third-party companies that thus obtain an equivalent net saving in raw material. These by-products are:

®: thermoplastic polymer for injection moulding;®: vinyl adhesive for the paper-making industry.

Other by-products, called textile scrap, are also produced during the various phases of the process. They are used in other industrial sectors in place of virgin raw materials.

4.3

The percentages declared in the table are calculated with respect to the raw materials actually used in production.

Alcantara regularly pays the environmental contribution for the CONAI (National Packaging Consortium) through packaging material suppliers. In fact, the suppliers expressly indicate the amount due on the invoice and Alcantara S.p.A. pays it together with the amount for the materials.The company’s product portfolio includes a variant of the Alcantara S.p.A. product for Furniture and Car seats, made using 25% in weight of post-consumption recycled raw materials, which, in 2010, represented 5% of the total production. In addition, the solvents used for production were regenerated and reused several times in the production process.

Use of Raw Materials

Use of materials per linear metre of Alcantara® product

Unit of measurement 2008 2009 2010

Liquid nitrogen sm3/m 0.66 0.85 0.61

Thermoplastic polymers g/m 741.98 697.06 681.40

Colorants and auxiliary agents g/m 441.99 440.43 428.55

Packaging g/m 294.10 265.57 119.71

Textile media g/m 275.70 383.44 195.17

Raw materials for polyurethane g/m 254.19 178.68 218.27

Glues and sizes g/m 191.19 115.34 156.06

Auxiliary post-treatment agents g/m 106.22 113.67 123.49

Solvents g/m 33.29 57.97 23.97

Abrasive paper g/m 1.48 1.02 1.56

Steel g/m 0.11 0.15 0.11

By-products put on the market

UM 2008 2009 2010

Alcanol®

Quantity recovered kg 365,669 265,352 336,711

Percentage recovered % 88% 89% 89%

Alcarene®


Percentage recovered % 91% 90% 100%

Cascami tessili


92 493

In the marketing and administration departments of the Headquarters in Milan, natural gas is used for heating the rooms and electricity for normal office activities, air-conditioning and operating the boiler.

At the production site in Nera Montoro, use is made of:Natural gas for direct heating and the production of steam at 6 bars;Steam taken from a 32 bar distribution network, fed by a cogeneration plant owned and managed by third parties. Before use in the production process, the steam is reduced to a pressure of 6 bars, creating electricity in its passage from a counterpressure turbine;Electricity, mainly for the production process, taken in part from the high-voltage Italian electricity network (132KV) and in part generated in the turbine through the reduction in pressure of the steam.

Energy Requirement

The reduction in Alcantara S.p.A.’s energy requirement is due to its constant commitment to optimizing its processes and production plants, which may be divided into the following main stages:

a cogeneration plant;

plant’s electricity consumption through: o the installation of new dyeing and laminating lines with a smaller energy impact;o the replacement of the air compressors and refrigerator units for the production of chilled water with new

generation machines with a low energy impact.

Due to the investments made during the year, the increase in total electricity consumption was limited to 14% despite an increase in production volumes of over 20%..

4.4

Energy consumption

U.M. 2008 2009 2010

Milan

Natural gas TJ 1.6899 1.8560 2.4132

Electricity TJ 1.745 1.892 1.853

Nera Montoro

Natural gas TJ 70.0525 18.4115 23.8752

Purchased electricity TJ 130.728 112.357 127.262

Self-produced electricity TJ 30.311 26.625 31.226

Steam TJ 681.908 550.107 628.576

Since 1st July 2008, Alcantara S.p.A.’s energy comes entirely from renewable sources.In 2010, RECS (The Renewable Energy Certificate System) certificates were purchased with an investment of 32,280 euros for an amount equivalent to the annual electricity consumption of the two installations. The balance between the energy procured and the certificates purchased has been certified by TÜV SÜD.For the year 2010, the entire amount of electricity procured comes from the hydroelectric power plant of Salisano, situated in the province of Rieti, near the production plant, with a view to optimizing the use of the electricity network.

94 495

The “Streamlined Life Cycle Assessment” made in 2008 on the production plant and research centre in Nera Montoro, revealed that the production process had virtually no impact in terms of ozone-depleting substance emissions.

In 2009, Alcantara S.p.A. drew up a Report on direct and indirect greenhouse gas emissions, in accordance with the provisions of the UNI ISO 14064-1 standard. The contents of the report, the data processed and the methods of calculation chosen were certified by TÜV SÜD.The operational boundaries for each site identified (headquarters, production plant and research centre) were defined for the greenhouse gas (hereinafter GHG) emissions inventory in accordance with the standard, including all direct and indirect activities for the production and transport of raw materials, production and transport of the finished product to the gates of the recipients in the subsequent machining phase.

The following phases were excluded:packaging” or production of the customer’s product as it cannot be checked;

use, in that it is not significant due to its negligible environmental impacts;end of life, due to the many different applications of the material.

Atmospheric Emissions4.5

The table below indicates the summary GHG emission values, total and per installation, certified by TÜV SÜD, expressed in tons of CO2 equivalents for the year 2010 and compared with the data estimated by the organization for the year 2009.

Diagram of greenhouse gas emissions: headquarters

Travel to/from work

Electricity Business trips

INDIRECT EMISSIONS

INDIRECT EMISSIONS

Natural gas consumption

Diagram of greenhouse gas emissions: production plant and research centre

Electricity

Steam

Travel to/from work

Raw materials(production and transport) Finished product transport

Waste transport

Business trips

INDIRECT EMISSIONS

INDIRECT EMISSIONS

Natural gas consumption

REMOVAL OF EMISSIONSReuse of waste and scrap

Total and per site GHG emission values

GHG contribution(tons of CO2 eq) Source of emission

Alcantara S.p.A.Organization

year 2009

Alcantara S.p.A.Organization

year 2010

Production plant site in Nera Montoro

(Terni)

Headquarters site in Milan

Direct emissions Natural gas 1122 1456 1322 134

Indirect emissions

Electricity 12806 14472 14264 208

Steam 104 119 119

Production of raw materials 13698 12812 12812

Transport of raw materials 3227 429 429

Waste transport and disposal 192 55 55

Transport of finished products 211 807 807

Business trips and travelling to/from work

739 715 405 310

Removal of emissions

Alcarene® -4078 -2851 -2851

Textile scrap -2060 -182 -182

Alcanol® -958 -360 -360

Purchase of electricity from renewable sources

-12806 -14473 -14473

TOTAL (tons) CO2 eq 12197 12999

and disposal

1 Direct emissions were calculated using the methods of calculation defined in the Emission Trading Scheme procedure. For the information not directly available on indirect emissions, use was made of the software Sima Pro® version 7.1.8 combined with the Ecoinvent V.2 database. The activities and processes that have an estimated impact of less than 2% were excluded from the data inventory.For all specific data on the Alcantara® production procedure, the information in the production inventory was used.

96 497

This important result was achieved through a number of stages which enabled the following benefits to be obtained, as well as the energy consumption advantages mentioned previously:

the two sites, with the Toray parent company and customers and suppliers since 2000;

Alcantara S.p.A. is “Carbon Neutral”, i.e. it has measured and fully offset all the carbon dioxide emissions of its entire production of the Alcantara® product, from cradle (including the raw materials) to gate (to delivery of the material to the customer). All operations are certified by TÜV SÜD.

In order to offset the residual CO2 emissions produced by Alcantara S.p.A., three projects have been financed for an amount of 76,000 euros and, under the supervision of the UN, will help to improve the conditions of life on our planet from the economic, social and environmental points of view.The projects concern plants that generate energy from renewable sources, in line with the choice of making exclusive use of this type of energy for all business activities.These projects have enabled Alcantara S.p.A. to offset a total amount of 13,000 tons of CO2 equivalents; considering that, on 31st December 2010, the company’s total residual emissions amounted to 12,999 tons of CO2 equivalents, the Total Balance is 0 tons of CO2 equivalents.

Carbon Neutrality: Offsetting CO2 Emissions 4.6

2010 RESIDUAL GHG EMISSIONS

Steam

Business trips

Transport of finished product

Production of raw materials

Waste transport and disposal

Travelling to/from work

Transport of raw materials

Natural gas

0% 10% 20% 30% 40% 50% 60% 70% 80%

Between 2008 and 2010, Alcantara S.p.A. reduced its tons of CO2 eq by over 50% through the purchase of electricity exclusively from renewable sources: 2008 28,491 ton CO2 eq. 2009 = 14,481 ton CO2 eq. 1

2010 = 12,999 ton CO2 eq. 15,492 ton CO2 eq. (- 54% vs 2008).

Compared to the year 1993, the reduction in tons of CO2 eq. has been no less than 81% (internal estimate 69,276 tons CO2 eq. for the year 1993): 1993 69,276 ton CO2 eq. 2010 = 12,999 ton CO2 eq. 56,277 ton CO2 eq. (- 81% vs 1993).

PROCEDURE FOR OBTAINING CERTIFICATIONIn order to reach the offsetting objective, the emissions must be quantified in accordance with the provisions laid down in the UNI ISO 14064-1 standard, which specifies the principles and requirements for designing, developing, managing and drawing up GHG inventories on the organization or company level.The greenhouse gas emission report was drawn up with the support of external specialists and certified by TÜV SÜD.The life cycle assessment included a “from cradle to gate” analysis conducted on all direct and indirect activities involved in the production and transport of the finished product to the gates of its end users.The direct emissions (inside the plant) and the indirect emissions (outside the plant) were estimated for both sites.

1 for the first year of the inventory, July 2008 – June 2009

98 499

The offsetting figures are as follows: The primary water procurement source for the industrial activities carried out at the production plant and the research centre in Nera Montoro is represented by the Nera river. A small part of the water consumed is taken directly from the river while the largest part is purchased from a third-party company that in turn takes the water from the Nera river.Another water procurement source is the purchased steam that is returned to the supplier after condensation. The water is used for sanitary purposes, fire-fighting and irrigation, industrial uses at the production plants and, in particular, for dyeing the finished product. All waste water is conveyed to an internal treatment plant.On the production plant there is only one final discharge point, duly authorized and controlled, downstream of the water treatment plant, which drains into the Nera river. On the basis of the two-monthly tests carried out by external laboratories qualified in accordance with the Integrated Environmental Authorization requirements and communicated to the competent authorities, the waste water quality parameters are well below the limits set by the legislation in force.Pollutants are normally below 25% of the limits set, only occasionally exceeding this percentage and, in any case, always remaining at extremely safe levels, in particular, the Acute Toxicity test carried out on the waste water has always been passed.During the course of 2011, major investments will be made to further reduce the surfactants and nitrous compounds present in the waste water.

Water Requirement 4.7

WIND POWER PLANT IN TURKEY

the greenhouse gas emissions, thus spreading the production of clean energy, it will also contribute to the sustainable development of the region by reducing the consumption of fossil fuels, creating temporary and permanent jobs, cooperating with the residents and increasing awareness of the issues related to climate change and energy, thus paving the way for new projects that promote clean and distributed energy solutions.

HYDROELECTRIC POWER PLANT IN TAIWANThe hydroelectric power plant is situated in Tainan, southeast of Taiwan, an important rural centre for the sale and production of sugar cane, rice, peanuts and salt. In addition to its mitigating effect on global warming, this project has contributed to sustainable development by creating jobs during its construction and operational phase, thus developing the hydroelectric energy sector in Taiwan.

GEOTHERMAL POWER PLANT IN INDONESIAThe geothermal power plant produces emission-free electricity for the Indonesian electricity network. The aim of the project is to encourage and increase the use of geothermal energy sources, which are renewable. The necessary mechanical skills create regular, permanent job opportunities. Electricity available locally may in turn create new opportunities for industrial companies and economic activities. Geothermal energy creates no solid products so no waste disposal is required.

Hydroelectric power plant in Taiwan: 5,000 ton CO2 eq

Geothermal power plant in Indonesia: 5,000 ton CO2 eq

Wind power plant in Turkey: 3,000 ton CO2 eq

Total offsetting: 13,000 ton CO2 eq

Total residual emissions: 12,999 ton CO2 eq

Total balance: 0 ton CO2 eq

Water withdrawal, by the source

Water withdrawal U.M. 2008 2009 2010

Nera river via TIC reservoir m3 1,502,500 1,180,356 1,225,844

Nera river m3 188,000 0 54,991

Water wells m3 80,200 80,506 114,835

Municipal water supply system m3 38,550 39,300 34,800

Total 1,809,250 1,291,362 1,430,470

Waste water

Drained into the Nera river m3 1,735,940 1,363,008 1,351,234

TurkeyTaiwan Indonesia

100 4101

The waste produced during the production activities consists mainly of residues (sludge) coming from the waste water treatment plants. This non-hazardous waste is conveyed to the authorized dump owned by the company and present on its production site.

The table below contains a list of the waste produced and disposed of on the plant in Nera Montoro, divided by the type and volume.

Most of the waste produced is not hazardous (84.65% in 2009, 92.00% in 2010).

Production of Waste4.8

The diagram below shows the size of the investments made by the company in Health, Safety and Environment in the years 2006-2010.

In 2010, the aims of the environmental protection investments were:

The conservation and improvement actions taken to reduce energy consumption represent one of the company’s top priorities. The diagram below shows the investments made to this aim by the company in the years 2006-2010.

In 2010, the energy saving investments were aimed mainly at reducing electricity consumption through:

auxiliary services: about 1,000,000 euros;

Environmental Investments 4.9

Waste Produced

Waste Description U.M. 2008 2009 2010

Buffing powderPhysiological waste of the grinding process containing polyester and polyurethane

Kg 434,000 313,349 353,910

Hazardous

Flame-proof fabric production waste, by-products containing impurities, empty hazardous substance containers

Kg 335,266 626,258 356,033

Non-hazardous waste other than buffing powder

Non-recoverable production waste, plastic, wood, etc.

Kg 688,852 2,057,408 846,009

Non-hazardous waste to internal dump

Water treatment sludge Kg 3,721,000 3,122,460 2,896,380

Total Kg 5,179,118 6,119,475 4,452,332

EHS

Health

Safety

Environment

500.000

3.000.000

2.500.000

2.000.000

1.500.000

1.000.000

2006 2007 2008 2009 2010

ENERGY SAVING

1.200.000

800.000

400.000

0

1.400.000

1.000.000

600.000

200.000

2006 2007 2008 2009 2010

102 4103

In accordance with the company’s Health, Safety and Environment policy and in respect of the legal provisions, Alcantara S.p.A. constantly provides training and briefing for its staff. In 2010, it gave 3,708 hours of training on Health, Safety and the Environment.

The charts below indicate the number of hours of training given in Health, Safety and the Environment over the past three years.

In 2010, much importance was given to the training of key figures in the management of environmental impacts (for further details, see paragraph 3.1.5 Training and Valuation).

4.10 Environmental Education and Other Initiatives

2008 2009 2010

Safety and the Environment 3,803 11,958 3,708

2010 HSE project status (Results and % of implementation)

20

0

120

160

100

140

80

60

40

Safety Health Environment Disaster prev. Total projects

Total 66 21 35 32 154

Implemented 63 19 34 31 147

% 95% 90% 97% 97% 95%

10

Area Type Total

ENVIRONMENT

Environmental centre management 76

Stormwater 18

Wastewater 604

Water resources and hydraulic risk 14

Excavation soil and rock waste management 14

Chemical and hazardous product management 8

Restoration of contaminated sites, new regulatory provisions 18

Single MUF 2010 environmental declaration form 8

Indicators for correlated work stress data methodology 8

HSE laws and standards 440

Conferences and presentations 83

104 105

The table below contains the information necessary to assess the degree to which the information requirements laid down by the GRI-G3 reporting standard are satisfied. The table has five columns. The third column indicates the disclosure level in accordance with the following legend:

Completely reported (the information given meets the requirements of the standard completely) Partially reported (the information given meets the requirements of the standard in part due to the sensitive nature

of the information or failure to conform fully to the requirements) – Not reported (no information has been collected or the information given is not representative)

G3 CORRESPONDENCE TABLE

Code Standard requirement Level Explanatory note Page

STRATEGY AND ANALYSIS

1.1 The Chairman’s Letter 8

1.2 Principal impacts, risks and opportunities 29

PROFILE

2.1 Name of the organization. 15

2.2 Primary brands, products, and/or services Alcantara® 15

2.3 Operational structure 21

2.4 Location of organization’s headquarters See also the “Contacts” section of the company site www.alcantara.com 17

2.5 Countries where the organization operates 17

2.6 Nature of ownership and legal form 17

2.7 Markets served 18, 63, 65-68

2.8 Scale of the reporting organization 33, 41, 50, 63

2.9 Significant changes during the reporting period regarding size, structure, or ownership 10, 16

2.10 Awards received in the reporting period Sodalitas Social Award 2010 “Andrea Pininfarina” special prize 9

REPORT PARAMETERS

3.1-3.3 Reporting period , date and frequency 10

3.4 Contact point for questions regarding the report or its contents See also the “Contacts” section of the company site www.alcantara.com 11

3.5-3.7 Reporting process, scope and limitations 10, 17

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities 10

3.9 Data measurement techniques and the bases of calculations 10

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

All previous measurements have been handled Project to value the environment and biodiversity in the area around the production plant and research centre

10

3.11 Significant changes from previous reporting periods in the objective, scope, or measurement methods applied in the report 10

3.12 Table identifying the location of the Standard Disclosures in the report 11, 104

3.13 Policy and current practice with regard to seeking external assurance for the report 10

GOVERNANCE, COMMITMENTS AND ENGAGEMENT

4.1 Governance structure of Alcantara S.p.A. 19

4.2 - 4.3 Whether the Chairman is an executive officer Independence and/or non-executive role of governance bodies

All members of the Board of Directors are independent and non-executive, apart from the Chairman and CEO

4.4 Mechanisms for providing recommendations to governance bodies 19-20

4.5 Linkage between compensation and results 19

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided See also Code of Ethics 20

4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization’s strategy on social responsibility

25

4.8 Missions, values and code of conduct 24

4.9 Procedures and committees for the management of economic, environmental and social performance

Management and the entire staff are responsible for implementing the Quality, Safety and Environment Management Systems and Corporate Social Responsibility, for achieving customer satisfaction, for development in line with the needs of the parties concerned and for reaching the objectives and targets set for the areas in which they work. See also Quality and Social Responsibility Policy

20

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance

Management sets the objectives and targets in the Operational Plans. The department managers of Alcantara S.p.A. take part in elaborating the Operational Plans and supervise its implementation a view to reaching objectives and targets set. See also the Quality and Social Responsibility Policy

20

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization 10

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses

22

4.13 Membership of trade associations 80

4.14 List of stakeholder groups engaged by the organization 27-28

4.15 Basis for identification and selection of stakeholders with whom to engage 27

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group 27-28

4.17 Outcomes of engagement 28

106 107

ECONOMIC PERFORMANCE

EC1-core

Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donationsand other community investments, retained earnings, and payments to capital providers and governments

36-37

EC2-core Financial implications and other risks and opportunities for the organization’s activities due to climate change 92, 97

EC3-core Coverage of the organization’s defined benefit plan obligations Obligations undertaken as laid down by law

EC4-core Significant financial assistance received from government 45

EC5-add Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation 54

EC6-core Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation 43

EC7-core Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation 51-52

EC8-coreDevelopment and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement

36, 78-79

EC9-add Understanding and describing significant indirect economic impacts, including the extent of impact 78-79

WORK PERFORMANCE

LA1-core Total workforce by employment type, employment contract, and region 50

LA2-core Total number and rate of employee turnover by age group, gender, and region 51

LA3-add Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations 61

LA4-core Percentage of employees covered by collective bargaining agreements

The entire staff is covered by the National labour collective agreement 56

LA5-core Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements

No organizational changes necessary to improve the management of business activities are taken without informing the trade union representatives beforehand. The labour agreement imposes a minimum period of notice to the staff in case of changes to the company’s operation or organization

LA6-addPercentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programs

58

LA7-core Rates of injury, occupational diseases, lost days, and absenteeism, and number of work related fatalities by region 49

LA8-coreEducation, training, counselling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases

55, 59-60

LA9-add Health and safety topics covered in formal agreements with trade unions 56

LA10-core Average hours of training per year per employee by employee category 55

LA11-addPrograms for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

55

LA12-add Percentage of employees receiving regular performance and career development reviews

All staff employed and working at the production plant and research centre are assessed systematically at every change of position and, in any case, at least once a year

53-54

LA13-coreComposition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity

52-53

LA14-core Ratio of basic salary of men to women by employee category 54

108 109

HUMAN RIGHTS

HR1-corePercentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

38

HR2-core Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken 42

HR3-addTotal hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

53, 55

HR4-core Total number of incidents of discrimination and actions taken None

HR5-coreOperations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights

To date, no reports have been made to the Management Representative or SA8000 Workers’ Representatives about interference with their right to join an association or take part in collective bargaining

56

HR6-coreOperations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour

Child labour is prohibited by Italian law and monitored by the SA8000 standard

HR7-coreOperations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour

Forced labour is prohibited by Italian law and monitored by the SA8000 standard

HR8 addPercentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations

– Not applicable in that there is no safety staff

HR9-add Total number of incidents of violations involving rights of indigenous people and actions taken No violation

SOCIETY

SO1-coreNature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting

77

SO2-core Percentage and total number of business units analyzed for risks related to corruption

The risk is monitored by the Oversight Committee across the entire organization 20

SO3-core Percentage of employees trained in organization’s anti-corruption policies and procedures 55

SO4-core Actions taken in response to incidents of corruption No action has been taken as no episode of corruption has occurred

SO5-core Public policy positions and participation in public policy development and lobbying

Alcantara S.p.A. does not participate or exert any pressure

SO6-add Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

Alcantara S.p.A. has never made contributions to politicians and has no future plans to do so

SO7-add Total number of legal actions for anticompetitive behaviour, anti-trust, and monopoly practices and their outcomes None

SO8-core Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations 45

PRODUCT RESPONSIBILITY

PR1-core

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

71

PR2-addTotal number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes

In 2010, no non-conformities were reported or handled

PR3-coreType of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

During the contract phase, Alcantara S.p.A. gives the customer all the necessary information about the products and labelling (composition, washing instructions, care and maintenance in time, abrasive strength, etc.) and the training necessary to use the material correctly

71

PR4-addTotal number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes

In 2010, no non-conformities were recorded or handled

PR5-add Practices related to customer satisfaction, including results of surveys measuring customer satisfaction 71, 73

PR6-corePrograms for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship

Conformance to the customers’ standards is a prerequisite, both in the car industry and in relations with major industrial customers in other sectors

PR7-addTotal number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes

None

PR8-add Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data None

PR9-coreMonetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

None

110 111

ENVIRONMENTAL PERFORMANCE

EN1-core Materials used by weight or volume 90

EN2-core Percentage of materials used that are recycled input materials 91

EN3-core Direct energy consumption by primary energy source 92

EN4-core Indirect energy consumption by primary source 92

EN5-add Energy saved due to conservation and efficiency improvements 93

EN6-addInitiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives

85, 92-93

EN7- add Initiatives to reduce indirect energy consumption and reductions achieved 93

EN8-core Total water withdrawal by source 99

EN9-add Water sources significantly affected by withdrawal of water 99

EN10-add Percentage and total volume of water recycled and reused 99

EN11-coreLocation and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

None

EN12-coreDescription of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

86

EN13-add Habitats protected or restored None

EN14-add Strategies, current actions, and future plans for managing impacts on biodiversity 86

EN16-core Total direct and indirect greenhouse gas emissions by weight 95

EN17-core Other relevant indirect greenhouse gas emissions by weight 95

EN18-add Initiatives to reduce greenhouse gas emissions and reductions achieved 95-96

EN19-core Emissions of ozone-depleting substances by weight

Alcantara S.p.A. prevents the risk of emissions of R22 gas through maintenance by specialized suppliers at all air-conditioning

from the equipment occurred

EN20-core NO, SO, and other significant air emissions by type and weight

There were no significant emissions of NOx or SOx except for those produced by the combustion of natural gas. The total amount of natural gas consumed is equivalent to about 2% of the total amount of energy used

EN21-core Total water discharge by quality and destination 99

EN22-core Total weight of waste by type and disposal method 100

EN23-core Total number and volume of significant spills

Over the past few years there have been no leakages or cases of contamination of the environment. Leakages, like all accidents and near misses, are monitored continuously by the Safety and Environment unit and handled through reports, the activation of emergency procedures and corrective action

EN24-add

Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped Internationally.

100

EN25-addIdentity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff

86

EN26-core Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation 85, 96-97

EN27-core Percentage of products sold and their packaging materials that are reclaimed by category 91

EN28-core Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations

No fines or any other penalties

EN29-add Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce

94

EN30-add Total environmental protection expenditures and investments by type 101

112 113

114

117

Alcantara S.p.A. Via Mecenate, 86 20138 Milano, Italy

www.alcantara.com [email protected] Ph +39 02 580301 Fax +39 02 5063886

Alcantara® is a registered trademark of Alcantara S.p.A.