THE ARMANI GROUP AND SUSTAINABILITY...in production, extreme care and attention to detail. 2019 saw...

THE ARMANI GROUP AND SUSTAINABILITY

2019

2019

THE ARMANI GROUP AND SUSTAINABILITY

4 | THE ARMANI GROUP

Undertaking self-examination about the sustainability of one's enterprise, measuring the progress made and setting new goals and objectives have become all the more important today, when events urgently call for changes and a new vision of and for the future.

The following pages document numerous initiatives that are oriented towards ever more ambitious goals and thus demonstrate our unflinching commitment to continuing on this path.

The Armani Group can rely on a system of solid values, complemented by the strong conviction that sustainability is evident above all in the company’s capacity to create products that stand the test of time This results from a model that is respectful of all the people involved and all the elements of which it is composed.

The Chairman

THE ARMANI GROUP

UNIQUE IN THE WORLD

FASHION, AS WE LIKE IT

A RESPONSIBLE SUPPLY CHAIN

THE PEOPLE OF THE GROUP

FOCUS ON THE CUSTOMER

THE COMMUNITIES WE SUPPORT

CONTENTS

9

27

75

37

97

51

107

119 METHODOLOGICAL NOTE - 120 CONTENT INDEX

Talking about Giorgio Armani means narrating a story that began more than 40 years ago.

An icon of elegance, a symbol of modernity and practicality, who is ever attentive to quality in every minute detail, Giorgio Armani embodies the essence of “Made in Italy”, effortlessly combining timeless style with a farsighted vision of the future. From its roots solidly planted in the Italian reality, the company has experienced steady growth across the globe, progressively expanding its offerings, from apparel and accessories to cosmetics and fragrances, as also eyewear, watches, jewellery, furniture and furnishing accessories.

The Armani Group’s distinctive sensitivity to societal and contextual changes in the environments in which it operates keeps the company increasingly and resolutely focused on sustainability.

THE ARMANI GROUP

THE ARMANI GROUP | 11

2019 IN FIGURES

9,064

155

EMPLOYEES WORLDWIDE

7INDUSTRIAL

SITES

1,850MILLION EUROS IN ECONOMIC

VALUE DISTRIBUTED

CHEMICAL TESTS PERFORMED ON PRODUCTS

598COMPANY-OWNED

SALES OUTLETS

2,144MILLION EUROS IN ECONOMIC

VALUE GENERATED

100,000HOURS OF TRAINING-EDUCATION

PROVIDED DURING THE YEAR

AUDITS PERFORMED AT SUPPLIERS' FACTORIES

OVER

8,400OVER

AND FACTS

The Armani Group has signed on to the Fashion Pact, one of the most important international initiatives launched to promote sustainability in fashion. The Pact brings together more than 250 leading brands and companies in the fashion and textile industries, all with the desire to promote a virtuous transformation of the sector.

In 2019, through the Armani Development Programme, the young talents in the Group contributed significantly to efforts to draw more attention to sustainability issues, by developing products with characteristics satisfying specific environmental, social and economic sustainability criteria.

Designed with particular attention to sustainability, the first two Armani Green Outlets were inaugurated in Sanremo and Hong Kong. This innovative concept is based on structures being made of recyclable materials with furnishings made from both natural and recycled materials, which will progressively be extended to the Group’s forthcoming outlets.

Currently in its tenth consecutive year, Acqua for Life is an initiative aimed at ensuring access to water in regions affected by water scarcity. To date, AFL has invested approximately € 9 million in water projects around the world, reaching over 200,000 people in 15 countries. All the projects are designed to be operational for at least three years and created in a manner such that upon conclusion of the initiative they can continue to serve the communities.

Research and experimentation remain ongoing with respect to innovative raw materials. Prominent among the materials adopted in 2019 are Ecodown® fibres — produced from plastic bottles and used in the padding of EA7 outerwear padded (puffer) jackets; recycled nylon used for an EA Underwear capsule collection of swimwear; regenerated leather fibres, used for some EA accessories; and finally recycled polyester, derived from PET bottles, which have been used to produce the Olimpia Milano team uniform.

SIGNATORY TO THE FASHION PACT

ARMANI TALENT

GREEN OUTLETS

ACQUA FOR LIFE

INNOVATIVE RAW MATERIALS


THE ARMANI GROUP | 1312 | THE ARMANI GROUP

THE BRANDS OF THE GROUP

Launched in 2005, the Giorgio Armani Privé Haute Couture collection is the ultimate expression of the inventiveness, elegance and refinement of the Armani style.Traditional craftsmanship blends with stylistic genius in the creation of these garments of ultimate luxury and incomparable ‘Made in Italy’ quality.

Established in 1975, the Giorgio Armani collection is one that best expresses the eternal underlying values traditionally associated with the brand: high quality of materials, purity of lines, timeless elegance, excellence in production, extreme care and attention to detail.

2019 saw the launch of the first collection of Alta Gioielleria, Fine Jewellery, these valuable creations being the outcome of traditional know-how and precision craftsmanship.

Seen as an expression of the lifestyle vision of Giorgio Armani, Armani/Casa has since 2000 clearly established itself as an international leader in the high-end furniture and furnishings sector.

The production of furniture, furnishings and accessories has been integrated into the operations of the Interior Design Studio, addressing the needs of private individuals and property developers.

Created in 1981, Emporio Armani emphatically exudes the modern, dynamic spirit of the brand, while maintaining the distinctive Maison Armani elegance.The iconic logo has now become synonymous with a metropolitan style, enjoying wide appeal across diverse target customer segments including the very young, with broad cross-category messaging.

Founded in 2004, EA7 is the brand vehicle that offers sports enthusiasts technical apparel which delivers performance as well as the characteristic Armani style.

Launched in 1991, the A|X Armani Exchange collection has been inspired by the urban reality of the streets. Targeted at the younger generations and the young at heart, this line offers clothing and accessories that are in step with the fast paced street-smart reality from which it draws inspiration, while remaining faithful to the spontaneity and energy that are part of the Armani DNA.

From fragrances to make-up and skin care products, each creation by Armani Beauty unmistakably bears the designer's creative fingerprint and is noted for the excellence of the details. Just as nature is the highest form of perfection, Armani Beauty products are designed to unveil the natural beauty that lies within each one.


Launched in 2002 as an expression of the Armani lifestyle aesthetic migrated to the universe of taste, Armani/Dolci uses only the best Italian ingredients to create an exclusive selection of delectable products infused with refined and surprising flavours.

Since their inception starting in 2000 and onwards, the Armani/Fiori boutiques have been offering a comprehensive and personalised service to clients who receive assistance right from the selection of flowers to choose from, to recommendations for decorative objects, vases and cachepots or planters.

The Armani food and beverage universe debuted in 1998 with the inauguration of the restaurant in Paris, the first of over 20 locations opened worldwide by Giorgio Armani. From Milan to Tokyo, and from Monaco to Dubai, the Armani restaurants and clubs are constantly evolving and currently boast a presence on four continents.

FOOD & BEVERAGE

Giorgio Armani SpA concluded an agreement with Emaar Properties for the establishment, in 2005, of Armani Hotels & Resorts. The services offered have been conceived to satisfy the highest expectations in the luxury sector, without compromising on style and design. The chain includes the Armani Hotel Dubai and the Armani Hotel Milan.


3 11

4

The Armani Group in the World

AMERICAS

ASIA PACIFIC

EUROPE

6 Italy

1

239 109

250COMPANY-OWNED SALES OUTLETS

REGISTERED/CORPORATE OFFICES

PRODUCTION SITES


1975 19

8119

7819

8419

7619

8219

7919

8519

7719

8319

80

24 July 1975Giorgio Armani and Sergio Galeotti found Giorgio Armani S.p.A.

First Giorgio Armani boutique (Milan)

First licence agreement with L'Oréal for the production

and distribution of Fragrances and Cosmetics

First Emporio Armani store (Milan)

Launch of the lines Armani Junior, Emporio Armani and Armani Jeans

First Fragrance Armani Donna

First collection Giorgio Armani Pret-à-Porter

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

Launch of the line Giorgio Armani Eyewear

Launch of the lineEmporio Armani Watches

First store Emporio Armani Caffè

(London)

Launch of the line and first store A|X Armani Exchange (Soho - New York)

First single-brand store Armani Jeans (Rome)

First Armani Junior store (Milan)

1997

First concept storeArmani/Manzoni 31,

which includes the first Armani/Casa store and

multiple brands of the Group

Launch of e-commerce sales

through the website armaniexchange.com

Launch of Armani/Dolci

Launch of the line Emporio Armani Gioielli

Launch of the line EA7 Emporio Armani

Inauguration of the new Armani/Teatro

(Milan)

Acquisition of the Nestlé factory at Via

Bergognone 59/61 (Milan)

New Corporate Headquarters

Launch of Giorgio Armani Cosmetics, Armani Collezioni andArmani/Fiori

Launch of the line Giorgio Armani High Jewelry

Launch of the haute couture line Giorgio Armani Privé

30 April,Giorgio Armani celebrates his company’s 40-year anniversary

Inauguration of the exhibition space Armani/Silos

Reorganisation of the portfolio of brands

Acquisition of the team Olimpia Basket Milano

First Armani Hotel(Dubai)

Establishment of the Fondazione Giorgio Armani

1998

1999

2000

2006

2003

2001

2002

2007

2004

2005

2008

2009

2010 20

1120

1220

1320

1420

1520

1620

1720

1920

18


GOVERNANCE AND ORGANISATION

The organisational structure of the Armani Group has evolved over the years to keep pace with and support its international expansion. As at 31 December 2019, the Armani Group is comprised of 14 business entities located throughout the world, wholly owned and controlled by Giorgio Armani SpA, which as the parent company performs a variety of operational and staff functions on a global scale, through corporate head offices located in Milan at via Borgonuovo 11. Within the Group, oversight is provided by the corporate officers under the leadership of Giorgio Armani, who, in addition to presiding as chair over the Board of Directors, holds the position of Chief Executive Officer.

Instituted in 2016, the Fondazione Giorgio Armani, Giorgio Armani Foundation, is charged with securing the enduring stability of the Group's governance structures such that they remain consistent with and adhere to the core principles that have always inspired the founder's creative and entrepreneurial activities, while also ensuring favourable employment levels and maintaining the Group's ability to create value. This decision in favour of continuity supports Giorgio Armani’s desire to provide for both a steady guiding hand in the future management of the company, as well as the transmission and safeguarding of the values and principles that are an intrinsic part of the Group’s DNA.

Board of directors

Corporate officers

Supervisory board

Board of statutory auditors

Chief Executive Officer and Chairman of the Board

Chair

Statutory Auditors

Substitute Auditors

Chair

Members

Giorgio Armani

Roberta Armani, Rosanna Armani,Silvana Armani, Andrea Camerana,Pantaleo Dell’Orco

Marco Terrenghi

Luca Gaiani, Vieri Chimenti

Maria Cristina Pedroni, Maurizio Morosi

Paolo Pacciani

Luca Gaiani, Marco Terrenghi

Directors

Structure of theGiorgio Armani Group


as at 31 December 2019

100

100

100

100

99

99

100 100

100

100

99,99

100 99

100 100 100

Giorgio Armani SpA

GA Canada

CaffèCroisette

GAMexico

GAMexico

Importer

GAAustralia

GACorporation

GA Japan

Alia Srl

Olimpia Srl

GARetail

Srl

SpanishBranch

PortuguesBranch

FrenchBranch

BelgianBranch

HollandBranch

GermanBranch

AustrianBranch

GABrazil

GAOHongKong

GAHongKong

GAShanghai

Rainbow Fashion

Management (Macao)

UKBranch

IrishBranch

SwissBranch

UltimateSA

(Athens)

GAOperations

Spa

UNIQUE IN THE WORLD | 2726 | UNIQUE IN THE WORLD

The Armani Group has over the years been able to successfully elevate its reputation and credibility to the highest levels.

For years, the company has been placed among the best companies in the world based on the Global RepTrak® 100 analysis, the ranking compiled by the Reputation Institute, a world leader in measurement and management of corporate reputation.

In 2019 the Group again entered the ranking, placing among the top five Italian companies and conquering the twenty-fourth position worldwide.

Achieving this significant result serves to distinguish the company not only for the exclusive product quality, but also for the serious approach shown in managing stakeholder relations and the unflinching constancy evident through the years in faithfully upholding its values and commitments.

UNIQUE IN THE WORLD

28 | UNIQUE IN THE WORLD

FROM IDEA TO POINT OF SALE

The union of creative genius with the pragmatic indications of the production and commercial/marketing areas bears fruit as the Armani product. This continuous collaboration between the various units of the Group leads to the development of the collection briefing, which is the initial phase that provides the fundamental indications for the subsequent creation of prototypes and sales samples, obtained by integrating technical and economic evaluations.

The samples sent to the showrooms of all markets and in all the distribution channels used by the Armani Group all over the world serve to initiate the sales campaign — a fundamental stage for the planning of volumes and production times.

The production orders collected through the sales campaign are transmitted to the various industrial entities of the Group, which are responsible for careful selection and management of suppliers. The monitoring and control system is key to ensuring that Armani Group managers remain constantly focused on product quality, and on the social and environmental sustainability of production.

The quality control checks on products continue even after delivery to the various regional warehouses, from where they are then distributed to the stores and eventually to the final recipient the customer, concluding a process whereby each product becomes the material testimony of the values affirmed by the Group.

PROTOTYPESFor each product line, style and manufacturing collaborate to transform briefing indications into prototypes, providing the means to deal with the first technical trials and address commercial/marketing feedback. In this preliminary phase, the initial estimates of final product costs are analysed in order to assess commercial sustainability.

SAMPLESUpon prototype approval according to the various commercial lines, the samples are produced with appropriate pricing for each market being defined, and thereafter sent to the showrooms in order to undertake the sales campaign.

COLLECTION BRIEFINGThe first phase of the process is aimed at preparing the collection briefing. This document, which will constitute the guideline for the appropriate positioning of products on the market, combines the emotion-oriented style indications with past and projected commercial/sales data.

FASHION SHOWSThis is the most dramatically staged and high-visibility occasion, during which the collection is officially presented to clients and especially to the national and international media.

PRODUCTION AND DELIVERY TO WAREHOUSESProduction planning is carried out and constantly updated thanks to regular monitoring of sales campaign performance and trends.Based on the geographical location, the volumes ordered are made available, subject to quality control, in the Group's warehouses within 4-6 months.

SALES CAMPAIGNSDuring predetermined periods of the year, by means of the product samples, sale of the products is undertaken via retail, wholesale, as well as online channels.

DELIVERY TO SALES OUTLETSThe logistics organisation located in various different regions of the world effectively enables delivery of products to the various commercial channels.

UNIQUE IN THE WORLD | 29


INTEGRITY AND SHARING

TEAMSPIRIT

POLICY RELATING TO

PERSONNEL

PROTECTING AND VALUING DIVERSITY

RESPONSIBILITY TOWARDS THE

COMMUNITY

PROTECTION AND RESPECT FOR THE ENVIRONMENT

TRANSPARENCY AND COMPLETENESS OF

INFORMATIONS

TRUST

THE VALUES OF THE ARMANI GROUP

The values of the Group as formalised in the Code of Ethics, guide the company’s mode of operation and conduct of business as reflected in the actions of all those working in their name and on their behalf.

In fact, the Code of Ethics is distributed to the Group’s directors, statutory auditors, employees, consultants, suppliers and business and commercial partners. The norms and rules contained in the Code, regardless of their legal value, are dictated by a specific social and moral commitment that the Group assumes. The Code of Ethics is available to all Group employees on the homepage of the corporate intranet. The Group attaches particular importance to protecting all forms of diversity, believing strongly that its presence is an added value and a critical success factor.

The Code of Ethics is available to all members of staff of the Group in an internal section of the company intranet and on the institutional website. Thanks to the series of measures undertaken, no episodes of discrimination were reported in 2019.

THE INTERNAL CONTROL SYSTEM

With a view to protecting and strengthening the long-standing reputation it has gained, the Group has implemented an internal control system that ensures decision-making is consistent with corporate objectives and values. This control system comprises a set of tools, procedures and regulations, designed to ensure appropriately structured information flows and effective processes are in place for identifying, measuring, monitoring and managing risks, especially risks pertaining to corruption related phenomena. In this regard, specific procedures have been established to monitor various aspects, such as payment authorisation, supplier selection, investments, management of relationships with public administration/governmental bodies, and gifts.

The Group has also developed an Organisational, Management and Control Model (Model 231) for prevention of offences, in line with the indications of Legislative Decree 231/2001 and subsequent amendments and additions. This Model therefore includes a system of rules and principles designed to ensure compliance with the law in the performance of the Group's activities, by identifying and eliminating potential risk situations. Representing an integral part of Model 231, the Code of Ethics is of central importance and acknowledged to be a fundamental part of the Maison Armani identity that serves as assurance of solidity and future growth. Supervision and oversight over the effective implementation of Model 231 is ensured by the Supervisory Board, which subjects the entire system to periodic inspections.

During 2019, the SB found no phenomena of corruption, whether ascertained or presumed, on the part of individuals working within or on behalf of the Armani Group. Likewise, there were no reported instances of non-compliance with the laws in force concerning social, environmental and economic matters.


CREATING AND DISTRIBUTING VALUE

The Armani Group has emerged from a long and intense process of commercial expansion to become a major international entity capable of creating and distributing wealth while contributing to the economic growth of the social and environmental context within which it operates, and also satisfying its own stakeholders’ economic interests.

Through ongoing research on style and diversification of product offerings, the Group is able to respond as rapidly as possible to market developments, and accordingly shape their attention and response towards a varied clientele with diverse purchasing options, also attributing appropriate and distinct positioning with respect to style and image for each of the brands in the portfolio. These are the key factors that continue to bring success to the Armani Group despite the difficulties of the international macroeconomic scenario, thereby further consolidating their leadership in the fashion and luxury sector.

Summary financial results (millions of €) 2019* 2018 2017

Consolidated Revenues 2,155.8 2,108.8 2,334.7

Gross Operating Profit before depreciation and amortisation (EBITDA)

494.1 314.3 437.7

Operating Profit (EBIT) 172.8 208.6 334.5

Economic and Financial Performance and Trends

In 2019, the Giorgio Armani Group continued to achieve positive results and continued the strategy of consolidating its international distribution network, characterised by a careful balancing of the direct Retail and Wholesale channels. In 2019, the Group expanded its scope of corporate reporting, with a view to ensuring greater control over the distribution network.The consolidated net revenues of the Group amounted to 2,155.8 million euros, representing an increase of 2.2% as compared to 2018. The Group achieved positive net profit amounting to 119.1 million euros. The Group's financial and balance sheet data remain solid thus allowing it to continue to self-finance its investment programmes: as at the end of 2019, net cash and cash equivalents (liquidity) amounted to 1,215 million euros (1,316 million euros in 2018), while net shareholders’ equity (net assets) was equal to 2,051 million euros (2,064 million euros in 2018).

* The 2019 Financial Results take into account the effects of International Financial Reporting Standard 16 (IFRS 16). For more information on economic performance, please refer to the 2019 Financial Statements of the Group.

The Armani Group Strategy — Key Guidelines

• Rationalisation and development of the distribution network, in alignment with its medium to long-term growth strategy.

• Strengthening of product research and innovation activities within structures of GA Operations Spa.

• Maintenance and creation of new licensing agreements with third parties for production and marketing of products and brands, with the aim of consolidating a leadership position in markets for non-core categories such as perfumes and cosmetics, eyewear, watches and jewellery.


* The 2019 Financial Results take into account the effects of International Financial Reporting Standard 16 (IFRS 16). For more information, please refer to the Appendix on p. 125.

** The Payments to Government Authorities also includes deferred taxes.

Generation and Distribution of Economic Value

Added value represents the Armani Group's capacity and ability to generate and distribute wealth, thus, on the one hand, contributing to economic growth in the social and environmental context in territories where it operates and, on the other hand, satisfying the economic interests of its own stakeholders. The added value indicates the difference between value and the intermediate costs of production; and determination thereof makes it possible for the Group to measure both the economic performance of management, as well as its ability to create appropriate conditions such that the economic value generated is distributed to the stakeholders. The economic value has been reported in three distinct levels: value generated, value distributed, and the value retained by the Group, which is necessary so as to increase financial and economic stability, thereby ensuring its viability over the long term.

Economic value generated and distributed (K €) 2019 2018 2017

Economic value generated by the Group 2,143,680 2,074,187 2,317,871

Revenues 2,155,806 2,108,772 2,334,717

Other income 3,848 4,879 4,845

Financial income 5,011 1,367 934

Value adjustments to financial assets - - -

Write-down of receivables (5,174) (7,884) (1,737)

Exchange rate differences (151) (9,663) (8,850)

Income / expenses from the sale of tangible and intangible assets - - -

Value adjustments to tangible and intangible assets (15,660 ) (23,284) (12,038)

Economic value distributed by the Group (1,850,244) (1,972,231) (2,101,182)

Operating costs (1,200,770) (1,359,834) (1,462,532)

Employee remuneration (455,456) (428,467) (433,779)

Payments to lenders * (18,718) (725) (1,229)

Payments to investors (134,995) (134,995) (120,080)

Payments to Government Authorities ** (39,767) (47,712) (82,946)

Gifts to third parties (538) (498) (616)

Economic value retained by the Group 293,436 101,956 216,689

Depreciation and amortisation (305,690) (82,392) (91,127)

Provisions (3,606) (2,688) (3,201)

Reserves (15,860) 16,876 122,361

Significant Events Occurring Following Close of the Financial Year

The global health emergency caused by the Covid-19 pandemic and the crisis prevailing during the initial months of 2020 have had severe repercussions on the world economy. European and non-European State governments issued exceptional, restrictive protective and public health countermeasures, which were implemented with ever greater determination, consequently exerting profound depressive effects on all economic sectors, especially sectors such as the Textile and Clothing, where tourist flows and the propensity to consume are highly relevant, and condition the production and distribution system thereof.

At the present time, sufficient approximation is not yet possible to accurately estimate the economic impacts of the Covid-19 pandemic; however the Group has sufficient resources complemented by appropriate and amply consolidated capital and financial structures to deal with these uncertainties.

FASHION, AS WE LIKE IT | 3736 | FASHION, AS WE LIKE IT

The environmental, cultural and economic changes of recent years have clearly and unequivocally highlighted the need to promote a detachment from the conventional production and consumption paradigm. The purchasing decisions, especially of the new generations, are today more than ever inspired by ethical and social values and criteria.

And while companies are called upon to demonstrate their proactiveness, the contours of a change that has already occurred are emerging with ever greater clarity: no longer considered an accessory value or a source of pride for a few, sustainability is now deemed a necessary condition for responding to the evolving requirements of society.

This phenomenon affects all sectors, including the fashion and luxury industries.

The market is demanding transparency, commitment, innovation. The Armani Group is responding.

FASHION, AS WE LIKE IT


SUSTAINABILITY FOR THE ARMANI GROUP

Beginning in 2013, the Group has integrated sustainability into its strategic decisions and choices, including establishing the Corporate Social Responsibility - Sustainability Unit, set up to facilitate and manage this process. The unit fulfils its responsibility for drafting and updating the Group's policies and identifying appropriate objectives and projects with respect to socio-environmental matters, including by interacting with national and international stakeholders, institutions and working groups.

The Group has thus defined an action plan articulated into five priority areas that involve the entire value chain and the actors who participate in it.

In 2019 the Group decided to take another step forward by signing on to the Fashion Pact, an important international initiative that brings together more than 250 of the major companies in the world of fashion.

The Fashion Pact and International Commitments

The signing of the Fashion Pact represents a fundamental step in affirming the commitment of the fashion world towards sustainability. The initiative, presented for the first time on the eve of the G7 summit in Biarritz, France in August 2019, brings together 250 leading brands and companies in the fashion and textiles universe with a view to defining a common path leading to reduction of the sector’s environmental impact. The objectives pursued by the Fashion Pact are sub-divided into three areas of fundamental importance — viz climate, biodiversity, and oceans — and were defined to be consistent with the requirements articulated by the scientific community in respect of protection of natural habitats, combatting marine pollution, and effective reduction of global warming. Convergence around the same objectives enables individual groups to share knowledge and experience with other members of the Fashion Pact, to act in a coordinated manner in respect of the supply chain, and to interact effectively with other manufacturing sectors, thus accelerating the achievement of anticipated results.

The Armani Group has joined the initiative since the first phase of drafting of the Pact in order to contribute towards ensuring the Fashion Pact becomes an effective tool capable of achieving concrete and ambitious sustainability goals and objectives.

The signing of the document has resulted in sustainability taking on an even more significant role in the corporate culture. The Group's sustainability action plan, having already launched initiatives in the same priority areas identified by the Fashion Pact, was thereby strengthened and integrated, thus making the Armani Group one of the key protagonists in the transformation of fashion within a sector that is capable of combining creativity, growth and sustainable development.

The Group's Pillars of Sustainability The Group’s concept of sustainability in fashion has been articulated in five priority areas, i.e. the “Pillars of Sustainability”, which serve as guide for all present and future actions.

FOCUS ON THE CUSTOMERin order to ensure excellence in service, understood to comprise quality, authenticity, safety and traceability of the product.

SUPPORT AND INVOLVEMENT OF COMMUNITIESin order to create value for the benefit of the territory and the people who live therein.

ENVIRONMENTAL PROTECTION AND EFFICIENT USE OF RESOURCESin order to reduce environmental impacts along the entire value chain.

EMPLOYEE WELLBEING AND TALENT DEVELOPMENTin order to ensure the personal and professional growth of all employees, considered to be the primary strategic asset of the Group.

RESPONSIBLE MANAGEMENT OF THE SUPPLY CHAINin order to build stable business relationships and make the supply chain even more virtuous from the standpoint of environmental and social impacts, based on greater involvement and dialogue with all suppliers.

40 | FASHION, AS WE LIKE IT FASHION, AS WE LIKE IT | 41

THE SUSTAINABILITY PLAN

Over the course of 2019, the Armani Group drew up a sustainability plan intended to guide corporate commitments and activities in the medium term.

Starting from the pillars of sustainability, specific improvement programmes have been identified that involve the different phases of the value chain and the entities comprised therein.

Finally, with a view to aligning the Group's commitments with the international sustainability reporting framework, the pillars and the resultant improvement programmes have been linked to the United Nations Sustainable Development Goals (SDGs).

The Sustainable Development Goals are 17 macro-objectives defined by the United Nations to ensure sustainable development of the world population by 2030, established for safeguarding the wellbeing of and protecting the planet.

These goals touch on various interconnected and interdependent issues (from the fight against poverty and inequality, to education, and the protection of ecosystems) with universal significance: in order to achieve them, it will require concerted coordinated action on the part of institutions, enterprises and civil society across the world.

In 2019, the Armani Group contributed either directly or through the organisations it supports, to 9 SDGs.


ARMANI GROUP SUSTAINABILITY PLAN

PILLAR SDGs SUPPORTED OBJECTIVE ACTIVITIES

Responsible management of the supply chain

Introduction and adoption of animal welfare standards

by 2025

Mapping of existing animal welfare standards on the market.

Drafting of a protocol for the purposes of application of the Armani Sustainable Project (ASP) logo.

Use of 25% of raw materials that meet specific

sustainability criteria by 2025Drafting of a protocol for the purposes of application of the Armani Sustainable Project (ASP) logo.

Raising the quality standards for suppliers of the

Group by 2030Review of the check list and review of the rating following the updating of the check list. Creation of the supplier evaluation committee and decisions making subsequent to audits.

Environmental protection and efficient use of resources

Reduction by 30% of emissions under direct

control by 2030

Mapping of the Group's direct CO2 emissions (stores, operations, and registered offices around the world).

Setting up the CO2 emission reduction plan based on the results of the mapping.

Use of 25% of raw materials that satisfy specific

sustainability criteria by 2025

Drafting of a protocol for the purposes of application of the Armani Sustainable Project (ASP) logo.

Sharing of the Group's sustainability protocols with licensees.

Use of electricity produced 100% from renewable

sources for the Group's Italian offices and stores by

2023

Mapping of electricity supply contracts and evaluation of costs.

Purchase of certificates of origin (GO Certificates) or possible implementation of new photovoltaic systems.

Commitment to purchase 100% FSC certified

paper by 2025

Mapping of purchases of non-certified paper.

Replacement of purchases of non-certified paper.

Commitment to eliminate single-use plastic from B2C

packaging by 2025, and from B2B packaging by 2030.

Mapping of the different packaging used.

Elimination of plastic components from product packaging (also in compliance with the "Single Use Plastic" directive).

Commitment to purchase 50% of recycled plastic in

packaging by 2030

Mapping of plastic materials used.

Development of a plan to replace purchases of virgin plastic with recycled plastic.

Support for innovations that reduce water pollution by

chemical substances

Participation at international working groups (CNMI, Fashion Pact).

Dissemination of Armani Group Manufacturing Restricted Substances List (MRSL).

Acquisition of new methodologies for the reduction of

water and land pollutionFinancing of a research programme on purification using microorganisms.

Employee wellbeing and talent development

Involvement of all corporate areas in the sustainability

plan of the Group

Creation and dissemination of content for the company intranet and the website.

Development of workshops (on sustainability in general, and on specific topics).

Development of talents Promotion of Armani Retail Development Programme.

Focus on the customerImprovement of the relationship with the customer and

raising awareness of sustainability issues

Expansion of product-related content released to the customer via the Certilogo QR code.

Enhancing involvement and raising awareness of customers with respect to sustainability issues relevant to the Group,

also through the adoption of the Green Outlet concept in the design of new retail spaces.

Support and involvement of communities

Launch of social responsibility projects aimed at the

community

Providing support to address the needs of the most vulnerable and for social emergencies.

Continuation of the Acqua For Life project.

Launch of stable collaborations in the field of training-

educationFinancing of medical-scientific research projects.


THE MATERIALITY ANALYSIS PROCESS

The Armani Group has decided to account for and report its results in terms of sustainability in accordance with the principle of materiality and therefore by highlighting the issues and themes considered to be important ("material") both by the Group and its stakeholders, thus making the Sustainability Report a veritable tool for undertaking active dialogue.

The selection of these issues and themes occurred over four successive phases:

1. Identification of the sustainability issues relevant to the Group;

2. Assigning of priorities by the Group to the issues identified;

3. Involvement of stakeholders;

4. Identification of the "material" topics to be described in the Sustainability Report.

The sustainability issues relevant for the Armani Group have been summarised in the five pillars of sustainability described above.

During the first phase, in order to facilitate the reporting of the Group's annual progress and to align the Sustainability Report with the international framework, the pillars were associated with one or more aspects of sustainability proposed by the International Standards of the Global Reporting Initiative. This made it possible to identify the indicators that are appropriate for reporting the Group's performance trends over time.

During the second phase, the Armani Group assigned action priorities to the previously identified issues by means of a scored assessment system.

Each issue after being assessed on the basis of five criteria, was assigned a score that is variable from 1 (low relevance for the business) to 3 (high relevance for the business).

The final score for each issue was obtained as the average of the scores attributed to the individual criteria. This made it possible to define the list of action priorities of the issues for the Group, thus contributing to drawing up the vertical axis of the materiality matrix.

Criteria adopted by the Group for the assessment of the relevant aspects

CRITERION DESCRIPTION

Strategic relevance for the Group

Aspect that could have a significant economic impact (positive or negative) on the Group's activities in the medium term (2-5 years or more)

Presence of the aspect in the Group's policies

Aspect is appropriately addressed in the documents relating to the Group's policies

Existence of certifications or voluntary initiatives relating to the topic under consideration

Presence of certifications or activities already implemented or planned relating to the aspect under consideration

Aspect that is liable to generate risks

Aspect which, if not properly managed, could entail tangible or intangible risks for the Group

Aspect that generates positive or negative impacts

Aspect in relation to which the Group's activities generate a positive or negative impact on the environment, the territory and/or the surrounding communities


The third phase saw the involvement of the Group's stakeholders to whom dedicated questionnaires were sent. In this manner, the interlocutors were able to provide an assessment in respect of the sustainability aspects on which they wished to receive more information from the Armani Group.

For each aspect of sustainability, they were asked to express a rating of interest scored from 1 (not at all interested) to 3 (very interested). For each theme, the average of the ratings of all stakeholders was taken, thus contributing to drawing up the horizontal axis of the materiality matrix.

During 2019, 43 stakeholders were contacted, obtaining an overall response rate of 65%.

EMPLOYEES

NGO

LICENSEES

MEDIA

CLIENTS

SUPPLIERSTRADE ASSOCIATIONS

STAKEHOLDERS OF THE GROUP

The fourth phase constitutes the synthesis of the first three, which made it possible to construct the Armani Group's sustainability related materiality matrix, which identifies the “material” aspects that are simultaneously relevant to the Group and its stakeholders.

All aspects with a relevance score equal to or greater than 2 were considered to be material; in this way, the process enabled identification of 23 relevant issues: 4 linked to economic aspects, 5 to environmental aspects, and 14 to social aspects.

The materiality process is periodically reviewed with respect both to the assignment of priorities to the issues identified and to the review of the panel of stakeholders, in a manner so as to ensure that it is always aligned with the company's policies and mission. For this reason, all aspects that were found to be non-material (with a score of less than 2 in the matrix) will be subject to periodic review and could be reported in subsequent editions of the Sustainability Report.

The Armani Group Matrix of Material Aspects

The materiality matrix is presented below along with the connection between the pillars of sustainability and the material issues.

The four economic aspects that emerged (economic performance, anti-competitive behaviour, anti-corruption, compliance with socio-economic norms and regulations) cannot be associated with any specific pillar given that they are relevant across the board and necessary for the activities of the Armani Group.

rele

vant

relevant

hig

hly

rele

vant

highly relevantSTAKEHOLDER

AR

MA

NI

GR

OU

P

4

23

1617

18

22

12

1311

9

147

8

21

6

2 20 3

5

11019

48 | FASHION, AS WE LIKE IT

15

Connection between the Group's Pillars of Sustainability and the material issues/themes

PILLARS OF SUSTAINABILITY MATERIAL ISSUES/THEMES

Responsible management of the supply chain

1. Child labour2. Forced labour3. Protection of human rights4. Social/labour-related assessment of suppliers5. Environmental assessment of suppliers

Environmental protection and efficient use of resources

6. Raw materials7. Energy consumption8. Water consumption9. Emissions into the air10. Compliance with environmental standards and

regulations

Employee wellbeing and talent development

11. Employment policies12. Health and safety in the workplace13. Promotion of diversity and equal opportunities14. Non-discrimination15. Employee training and education

Focus on customer

16. Customer health and safety17. Customer privacy/data protection18. Labelling and communication related to the

product

Support and involvement of communities

19. Local communities

Relevant across the board

20. Economic performance21. Anti-competitive behaviour 22. Anti-corruption23. Compliance with socio-economic norms and

regulations

FASHION, AS WE LIKE IT | 49

A RESPONSIBLE SUPPLY CHAIN | 5150 | A RESPONSIBLE SUPPLY CHAIN

To obtain an excellent product, both in terms of quality and sustainability, it is essential to ensure the close collaboration of all the actors operating in the value chain. Over the years, indeed thanks to greater involvement from and in close collaboration with suppliers, the Group has launched a series of initiatives aimed at promoting greater sustainability both within the supply chain, as well as across all offices, stores and company-owned operational sites.

The numerous activities undertaken concern various key areas:

• active collaboration with stakeholders, in particular with suppliers, in order to make the supply chain even more virtuous;

• ensuring the quality and safety of the product and its components;

• selection of raw materials for products and packaging that meet specific environmental and social sustainability criteria;

• efficient management of resources, such as water and energy.

A RESPONSIBLE SUPPLY CHAIN

52 | A RESPONSIBLE SUPPLY CHAIN

RESPONSIBLE MANAGEMENT OF THE SUPPLY CHAIN

The Group is cognisant of the strategic importance of supplier relationship management in order to be able to offer customers the best in terms of quality and style — the very values underpinning the brand philosophy.

With the objective of disseminating and promoting their sustainability policies across the supply chain, the Group has developed a series of relevant documents that suppliers are required to sign on to in the contract signing phase.

Specifically:

• The Environmental Code of Conduct, which aims to minimise the negative impacts on the environment deriving from the Group's supply chain activities, through control and management of emissions, management of waste, and efficient use of resources.

• The Code of Social Conduct, which aims to ensure dignified, decent and safe working conditions for all personnel involved in the entire value chain of the Group, through a series of measures that serve to protect the rights and safety of workers — these include prohibition against the use of child labour and forced labour, and against implementing discriminatory practices of any kind.

• The Restricted Substances List (RSL), is the reference document for management of product safety that serves to guide the entire supply chain towards the reduction and progressive elimination of potentially hazardous chemical substances, in a manner consistent with updated regulations and norms, and the best available technologies.

These documents are prepared by the Group's CSR office, are updated periodically and available in a dedicated section of the Group's official website1. The dissemination of these policies is an integral part of the awareness-raising and training/education programmes for suppliers in various regions of the world.

1https://www.armani.com/experience/us/corporate/social-responsibility/supply-chain/

The Armani Group’s Supply Chain

The Group's suppliers may be divided into four main categories:

• Suppliers of finished products and apparel items, who, by autonomously procuring raw materials, produce the finished apparel item according to a technical design or sample of the product

• Suppliers of Subcontract Manufacturing Services, to whom the Group entrusts the production of the finished product, supplying the necessary raw materials and technical information for the work planned

• Suppliers of raw materials

• Providers of services, such as analysis laboratories, consulting and general services procurement companies

Breakdown of purchasing by category and geographic distribution

(excluding providers of services)

65%

41%

SUBCONTRACT MANUFACTURING SERVICES

AFRICA AMERICAS

RAW MATERIALS

ASIA PACIFIC

FINISHED PRODUCTS / APPAREL ITEMS

EUROPE

19%

8% 2%

16%

49%

A RESPONSIBLE SUPPLY CHAIN | 53


OVERSIGHT OF THE SUPPLY CHAIN

In order to monitor compliance with the codes of environmental and social conduct and with all the documents signed by suppliers during the contract formalisation phase, the Group has implemented a process for monitoring the supply chain, by means of social and environmental auditing programmes. The audits are aimed at identifying any potential critical aspects and consequently, at guiding the suppliers towards any eventual corrective actions necessary to be able to continue maintaining the qualification of supplier to the Group. On the basis of any non-compliance reported, the suppliers are subsequently ranked on a rating scale from A to E, so as to enable the CSR unit to effectively monitor their progress on the path to complete compliance with the standards.

The suppliers whose overall rating is initially below B, are guided towards achieving improvement in the global assessment through a corrective action plan, with achievement timelines established according to the importance of the respective issues being addressed. However, where suppliers receive an overall rating that is not in line with the Group’s expectations, a meeting with them is immediately convened and they are requested to take corrective action within very brief timeframes and, where there appears to be no possibility of adherence to the standards, an exit plan is defined.

This process of supplier evaluation and engagement has served not only to ensure compliance with the requirements defined by the Group, but above all fosters the sharing of good environmental and social practices amongst suppliers, thus increasing and enhancing the level of awareness within the sector.

Rating


Supplier Audits and Assessment

A-B EC-D

Compliant with

standards

Corrective action plan

(CAP)

Immediate corrective

actions

Documentary verification

of CAP

CAP complete

= Upgrade

CAP incomplete

= Exit plan

CAP complete

= Upgrade

CAP incomplete

= Re-audit

Coverage of Social and Environmental Audits

Given the large number of the Group’s suppliers, a priority list is defined annually for the audits to be carried out in the field.The priorities are defined on the basis of the risks that could be generated by suppliers who:

• enjoy autonomy of action in procurement and supply management, such as suppliers of marketed items;

• have production facilities in countries considered to be at risk of employing improper practices towards workers and the environment, such as in the Asia region.

In addition, each year the Group tries to cover the largest number of production sites managed by each supplier while avoiding repeating the controls at the facilities already audited.

This explains the variability of the number of audits over the years.

201720182019

220

155147

200

150

50

100

0

Number of social and environmental audits


During 2019, 155 social and environmental audits were carried out, covering 37% of the Armani Group’s suppliers, in terms of 2019 turnover.

SUPPLIERS OF RAW MATERIALS

<1

SUPPLIERS OF SUBCONTRACT

MANUFACTURING

Geographical distribution of audited suppliers, based on turnover

99%

1%

AMERICASASIA PACIFIC

SUPPLIERS OF MARKETED ITEMS

EUROPE

1%

3%96%



PRODUCT SAFETY

Guaranteeing the safety of its products is a fundamental requirement for any company operating on the market. This is even more so in the fashion world, where attention to the safety of chemical substances used for the production of apparel items has been further accentuated by the environmental campaigns of recent years.

Since 2013, the Group has defined the initiative "Zero Discharge 2020" as a pathway for eliminating or minimising potentially hazardous substances from its production processes and products by 2020.

This is an objective that can be achieved only by strengthening the dialogue with suppliers in order to ensure on the one hand that use is made exclusively of non-hazardous chemical formulations and, on the other hand that the quest and research continues for suitable alternatives that ensure the highest quality standards, taking into consideration the environmental, economic and social impacts thereof.

The Armani Group’s path towards the Zero Discharge goal consists of three phases that are interconnected with each other:

• Defining and periodic updating of the list of restricted substances (Restricted Substances List - RSL)

• Execution of appropriate testing on significant samples from the collections• Preparation of a report on the results of testing conducted by the Group

The Group has also actively contributed to the drafting of the documents "Linee guida sui requisiti eco-tossicologici per gli articoli di abbigliamento, pelletteria, calzature e accessori" (Guidelines on the eco-toxicological requirements for articles of clothing, leather goods, footwear and accessories) and "Linee guida sui requisiti eco-tossicologici per le miscele chimiche e gli scarichi industriali” (Guidelines on the eco-toxicological requirements for chemical mixtures and industrial waste) by the Sustainability Committee of Italy’s Camera Nazionale della Moda Italiana (National Chamber for Italian Fashion).

The first document is aimed at encouraging the responsible use of chemical substances in the production chain through the dissemination and promotion of virtuous practices.

The second, on the other hand, establishes ambitious limits both for the use of chemical mixtures in production and for the detection of waste in water, providing useful information and indications for monitoring and control of the entire production cycle. Thanks to the commitment in place and the systematic control of the supply chain, in 2019 the Group did not find any instance of non-compliance with the regulations currently in force with respect to health and product safety.


The Restricted Substances List (RSL)

The Restricted Substances List (RSL) is the result of collaboration with all the actors involved in the production process, in particular suppliers and chemical laboratories. The document lists: the substances subjected to restrictions, the maximum permissible limits, the acceptability ranges, and prescribed methods of analysis for each substance.

The Group has both a basic RSL, that is valid for any type of product, as well as specific RSLs for the various merchandise categories, applicable to materials and packaging used for the products of the various brands: clothing and accessories, furniture and furnishing products, and costume jewellery. Children's items are subject to a more restrictive RSL than that for articles and products intended for adult consumers.

The Real Time Management of Testing

Given that the Group operates in the global market, the procedures to be implemented and the protocols to be adhered to are thus manifold and may vary according to the different markets. For this reason, the Group has equipped itself with an IT system for the management of chemical testing that allows for real-time monitoring of the progress of the process and facilitating the management thereof in the various industrial sites, through simplification and harmonisation of procedures. In particular, the programme has made it possible to establish a uniform language with a standardised single test request form for all operational locations of the Group, as well as to track test outcomes and results in an easily searchable, shared centralised system that also allows saving and storing marketing authorisations for placing the products on the market in various intended target countries.

Over the course of 2019, more than 8,400 chemical tests were performed on the products.

Laboratory Tests

Laboratory testing on products, carried out by means of sampling, are essential to monitoring progress towards the Zero Discharge objective and ensuring that the products placed on the market are in line with the relevant reference RSLs. The Armani Group relies on the collaboration of the most highly accredited, ISO 170252 certified chemical laboratories in the sector, so as to ensure not only the most reliable analytical techniques but also effective ongoing updating of the specifications. The selection of the laboratory and of the samples to be subjected to testing, the management of testing related flows and appropriate reporting thereof are entrusted to the respective offices responsible therefor at each industrial site of the Group.

The products whose laboratory tests yield positive results are sent onward for sale, whereas those for which critical issues are identified are assessed with the supplier in order for them to be appropriately adapted to the required parameters.

Drafting of Reports on the Results of Tests

The results of the tests carried out during each season are analysed in order to assess the presence of chemical substances in the products that could be the subject of specific further testing. The results of the tests and in-depth analyses then contribute to the defining and updating of the parameters of the RSLs.

2ISO 17025 is an international standard that sets forth the "General Requirements for the Competence of Testing and Calibration Laboratories".


THE SELECTION OF RAW MATERIALS

The selection of raw materials takes place in compliance with precise economic, ethical and environmental criteria that ensure consistency, on the one hand, with the Group’s sustainability-related values and principles, and with client wants and needs, on the other.

The Armani Group intends to expand the range of product offerings that reflect a series of sustainability requirements by implementing a process of continuous improvement of its performance in terms of environmental and social factors.

This process necessarily entails the engagement of its own supply chain, by way of encouraging the quest for more sustainable solutions in the management of production processes, which also reduce the company's environmental impact and promote appropriate working conditions that are fully compliant with human rights regulations.

For this reason, the “Armani Sustainability Project” (ASP) logo was created, serving as the distinguishing mark of endorsement to be applied to all the products of the Group that meet specific sustainability criteria.

In order to respond to the growing focus on social and environmental issues, during 2019 (specifically in the Spring-Summer 2019 and Autumn-Winter 2019 collections), apparel items with innovative raw materials were introduced.

Armani Sustainability Project (ASP)

The logo incorporates the design that belongs to an aesthetic sense that is very dear to Giorgio Armani, the stylised bamboo leaf of the Eastern tradition, which revolves around the text evoking the concept of the circular economy.

Cotton made in Africa

After first introducing it in 2018 in the Emporio Armani line, for the Spring-Summer 2019 collection, the Armani Group decided to extend the use of denim from the Cotton made in Africa (CmiA) initiative also to the Armani Exchange line.

The CmiA initiative of the Aid by Trade Foundation serves the objective of improving the lives and living conditions of cotton farmers in sub-Saharan Africa through targeted training programmes.

The Foundation teaches farmers modern and efficient cultivation methods, thereby helping them to improve both the quality of cotton and their economic and social conditions. Furthermore, the Foundation has defined appropriate cultivation standards to ensure the maintenance of soil fertility and the protection of water courses, through the responsible use of pesticides and fertilisers.


Puffer Jacket made from Recycled PET

The Fall-Winter 2019 season saw the

launch in the EA7 line of puffer jackets

filled with Ecodown® fibres, produced by

Thermore from PET bottles. At the same

time, this made it possible to avoid the

use of animal feathers, giving new life to

disposable plastic bottles.

The filling for a single puffer jacket

corresponds to the recycling of about 10

bottles.

Eagle Arcade Swimwear made from Recycled Nylon

Emporio Armani Underwear has

launched a capsule collection dedicated

to beachwear that includes swimwear

for women and men, made with 100%

recycled nylon fibre. The use of recycled

nylon gives new life to still useful materials

while eliminating the need for producing

virgin synthetic fibres. Even the shopping

bag is made from 80% recycled plastic

that is recyclable at the end of its life.

The capsule was sold online as of July

2019 and exclusively within the dedicated

temporary stores, operated on some

Italian beaches on the occasion of the

itinerant initiative Eagle Arcade Beach

Tour, which was designed for the purpose

of raising public awareness with regard to

issues related to environmental protection.

Olimpia Team Uniform Outfit made from Recycled Polyester

For official championship and Euroleague

matches, the Olimpia Milano players have

definitively adopted the team uniform

made from recycled plastic (PET)

bottles. The team wishes to continue

being spokespersons for environmental

issues, underlining how improvements

can be achieved with even small attentive

gestures and personal and commitment

at the level of the individual person.

To give greater prominence to the

initiative, on the occasion of the 2018/2019

playoffs, the ASP logo was inserted on

the uniforms.

Accessories made from Regenerated Leather Fibre

During the Spring-Summer 2019

season, a series of accessories made

from regenerated leather fibre was

introduced in the Emporio Armani line.

The production of leather fibre is similar

to that of paper: the processing waste

of natural leather is ground and mixed

with synthetic aggregates, pressed

and processed into sheets of various

thickness; these may then be subjected

to finishing processes to enhance their

characteristics so as to increase the

similarity to natural leather. The entire

process occurs without involving water

use, thus avoiding the production of

wastewater, whose high environmental

toxicity represents a significant problem

in the tanning industry.


Fur Free policy

The Group has abandoned the use of animal fur in its collections starting with the Autumn-Winter 2016-2017 season.

The Group's Fur Free Policy is aligned with the standards of the Fur Free Alliance and reflects the Group's desire to help stem the loss of biodiversity on planet Earth.

In particular, the Group has undertaken to not use products deriving from animals that are hunted or bred specifically for use of their fur, including minks, foxes, beavers, otters, and raccoon dogs; the use of rabbit fur has also been eliminated. This category does not include synthetic furs, the skin or hair of skins typically used to make leather, and fibres obtained from shearing or combing.


Institutional Packaging INNOVATIVE AND SUSTAINABLE PACKAGING

The quest for ever better results in terms of sustainability explains the Armani Group's approach of not excluding any aspect that may offer the possibility for action thereupon.

For this reason, since a number of years, packaging has also been the subject of research and study, always inspired by the concept of incremental innovation, which facilitates making quality improvements without sacrificing style.

The selection of packaging used in stores is guided by the following principles:

1. Preference for recycled raw materials and reduction in purchase of virgin raw materials;

2. Reduction in plastics use, transported volumes, and waste;

3. Sourcing and supply of paper and cardboard from forests managed according to the standards of the Forest Stewardship Council (FSC)3;

4. Selection of recyclable and/or reusable solutions.

These principles represent the basis for ongoing dialogue and consultation with packaging suppliers, the latter being in fact required to comply with precise standards of chemical safety, resistance, and quality in all phases of production. Compliance with the required standards is ensured with the support of external laboratories, who are entrusted with the responsibility for performing testing on materials.

During 2019, the Group carried forward a process of improving institutional packaging, focusing in particular on the recyclability of packaging. Indeed the solutions that have been studied enable simplifying as far as possible the process of recovering individual materials, making it easier for customers to appropriately dispose of the packages.

These interventions have been adopted across all the lines: Giorgio Armani, Emporio Armani and Armani Exchange. In addition, umbrella carrier bags made from compostable plastic have been adopted in the Giorgio Armani and Emporio Armani boutiques, in the Emporio Armani Caffè and in the Nobu restaurant.

3Independent forest certification system that certifies forest management according to rigorous environmental, social and economic standards.

Revamp of the institutional packaging for the Emporio Armani line saw the creation of:

• Single-material shopping bags produced for the EA7 line, made entirely of paper, with central flat belt handles;

• Boxes for the underwear line made from 50% recycled plastic;

• Single-material sock hangers, by replacing the recycled polyester hook with cardboard hook.

The institutional packaging for the Giorgio Armani line was extensively revamped between 2017 and 2018.

In 2019 the main innovation was the introduction of shopping bags made entirely out of FSC paper and with handles made of tubular woven paper cords.

For the Armani Exchange line the main innovations were:

• Progressive adoption of hang tags made of Soporset paper, derived from forests managed responsibly using the most advanced techniques;

• Boxes for the underwear line made from 50% recycled plastic.


RESPONSIBLE MANAGEMENT OF OUR OPERATIONAL OFFICES

Protection of environmental resources being part of the Group's pillars of sustainability, it therefore represents one of the main areas wherein the company has reaffirmed deep commitment to improving its performance.The Armani Group pays particular attention to monitoring its environmental impacts, without which it would not be possible to plan effective initiatives for reduction thereof. The activities launched for this purpose may be categorised into three macro domains:

• adoption of adequate organisational methods and the best available techniques so as to optimise energy and water consumption and minimise waste;

• attention to waste sorting and disposal;• ensuring awareness and involvement of personnel on issues related to

environmental protection.

The 2019 scope of reporting has been extended to all of the consolidated companies of the Armani Group also with regard to consumption (energy and water), production of waste and greenhouse gas emissions.Given that the scope of reporting in respect of the 2018 data included only the Italian companies of the Group, the comparison between the two years is inconsistent, for this reason, reported in the following tables are the data for the year 2019, pertaining both to the new scope and to the previous scope of reporting.

Water withdrawals by source4 (m3) 2019 2019 2018 2017

New scope of reporting Scope of reporting, 2017-2018 Data

Withdrawal from aqueduct 241,603 124,584 124,705 89,045

42017 Scope of reporting: GA Operations SpA and Giorgio Armani SpA2018 Scope of reporting: GA Operations SpA, Giorgio Armani Retail Srl, Giorgio Armani SpA, Alia Srl2019 Scope of reporting: GA Operations SpA, Giorgio Armani Retail Srl, Giorgio Armani SpA, Alia Srl2019 Scope of reporting - World: all global operational locations of the Group

Water

The Armani Group's water consumption is mainly linked to food service activities, sanitary services, fire testing and air conditioning, with the withdrawal sourced primarily from the aqueduct.The Group continues to make investments intended to augment efficiency in the use of water resources, while avoiding all forms of waste. This takes the concrete form of implementing both structural interventions and training and awareness-raising actions aimed at all personnel, relating to saving water through daily actions so as to reduce wasteful use of this resource.

The results have rewarded these efforts: in 2019, despite the activation of some buildings and the opening of the company gym Armani/Fitness, water consumption dropped slightly as compared to the previous year.

Waste

The reduction of waste production represents another fundamental area for committed engagement and action by the Group, through activities ranging from employee training on issues such as wastage and differentiated waste collection, to installation of drinking water fountains in the company’s operational locations, with the aim of reducing the use of water packaged in plastic bottles and the replacement of disposable plastic items with products made from compostable material.This type of intervention shows the extent to which the Group also pays attention to the daily practices and habits of its employees, mindful of the not insignificant impact they generate.

Waste produced by type4 (t) 2019 2019 2018 2017


Total waste 16,850 1,080 1,141 1,157


Energy

The Armani Group attributes great importance to saving energy, demonstrated in the company constantly monitoring its consumption so as to better direct efforts towards achieving the objectives defined in the sustainability plan.

Total energy consumption4 (TOE) 2019 2019 2018 2017


Direct energy consumption (methane, diesel fuel)

1,450 1,433 1,322 1,386

Indirect energy consumption (electricity) 9,639 4,309 4,400 4,430

Total consumption 11,089 5,742 5,722 5,816

5 The emission factors for electricity were obtained, where possible, using the specific residual energy mix for each country, i.e. the energy mix net of the shares of energy produced from renewable sources with appropriate certifications of origin. Where this information was not available, the data provided by IEA was used. The reference year of the emission factors for all countries is 2018.As regards methane gas and diesel, on the other hand, the emission factor used is the same for all countries and obtained from the Ecoinvent3 database.

Greenhouse Gas Emissions

Greenhouse gas emissions are calculated by converting energy consumption into tonnes of carbon dioxide equivalent (tCO2eq), by applying specific emission factors for the different energy sources (diesel, methane and electricity) and for the relevant country5. The greenhouse gas emissions, being linked to energy consumption, reflect their own trend over time.

Greenhouse gas emissions4 (tCO2eq) 2019 2019 2018 2017


Direct emissions (from fuels) 5,090 5,031 4,647 4,876

Indirect emissions (from electricity) 35,630 16,141 16,482 16,595

Total emissions 40,720 21,172 21,129 21,471

The Energy Saving Programme

• Implementation of energy diagnostics and audits across all Production Sites and offices in Italy, as well as across a series of stores, in order to obtain a global and comprehensive snapshot of its energy consumption levels and identify some savings trajectories

• Implementation of remotely operated systems for monitoring of company-wide consumption levels subdividing them, for example, by specific work areas, such that possible actions for improvement may be made more evident

• Centralisation of temperature regulation in the work environments, in order to ensure proper management

• Use of an innovative digital signage platform to manage the turning on and off of all monitors

• Progressive replacement of interior lighting with LED technology

• • Installation of sensors that regulate the turning on and turning off of lighting in all spaces

• Attention to the use of low-emissivity structures and materials in the design-planning of the renovation and restructuring of the Group's buildings

THE PEOPLE OF THE GROUP | 7574 | THE PEOPLE OF THE GROUP

On a daily basis, Armani Group employees proudly carry forward its traditions and uphold the company’s values and founding principles, thus ensuring its leadership in the world of fashion.

Attention to the growth and wellbeing of employees is of fundamental importance for the Group and in fact constitutes one of the pillars of its sustainability plan.

In addition to paying particular attention to contractual stability and protection of safety in the workplace, the Group offers ongoing opportunities for both professional and personal training and development, and various measures aimed at promoting health, quality of leisure time, and the proper balance between professional and family life.

THE PEOPLE OF THE GROUP

The People of the Armani Group

76 | THE PEOPLE OF THE GROUP

AS OF 31 DECEMBER 2019,THE ARMANI GROUP EMPLOYED

9,064PEOPLE

WOMEN

MEN

5,651

3,413

AMERICAS

2,4931,309

1,184

THE PEOPLE OF THE GROUP | 77

ITALY

3,055

EUROPE

1,022

ASIA - PACIFIC

2,494

2,048

1,661

633

1,007

833

389


The Armani Group comprises 9,064 people globally. The presence of women is consistent across all corporate levels and represents more than half of the Group's overall workforce. This result has been achieved thanks to various accommodations and arrangements in terms of flexibility in working hours, such as the possibility to avail of a part-time work schedule upon returning from maternity/parental leave up to the child's third year, the latter being granted in a much more generous and extensive manner than stipulated as per the provisions of the CCNL (Contratto Collettivo Nazionale del Lavoro, National Collective Bargaining Labour Agreement).

The breakdown by contractual functional classification remains substantially stable as compared to previous years, indeed just like the distribution of employees by age group and years of service within the Group.

Women by functional classification (%)

2019 2018 2017

Senior Executives/Top Management 47% 44% 45%

Supervisory-Managerial 51% 50% 50%

Employees 71% 69% 69%

Salesforce 62% 60% 61%

Workers 60% 62% 67%

Employees by contractual functional classification and gender (no)

2019 2018 2017

Men Women Total Men Women Total Men Women Total

Senior Execs/Top Mgt

166 149 315 185 146 331 177 147 324

Supervisory-Managerial

585 616 1,201 561 559 1,120 570 575 1,145

Employees 688 1,677 2,365 713 1,610 2,323 694 1,577 2,271

Salesforce 1,555 2,585 4,140 1,389 2,083 3,472 1,318 2,042 3,360

Workers 419 624 1,043 369 591 960 314 641 955

Total 3,413 5,651 9,064 3,217 4,989 8,206 3,073 4,982 8,055

Employees by age group and gender (no)

2019 2018 2017


<30 1,214 1,721 2,935 1,125 1,494 2,619 967 1,416 2,383

30-50 1,765 3,096 4,861 1,635 2,712 4,347 1,660 2,731 4,391

>50 434 834 1,268 457 783 1,240 446 835 1,281

Total 3,413 5,651 9,064 3,217 4,989 8,206 3,073 4,982 8,055


The company’s decisions concerning employment contracts, oriented towards maintaining stability, clearly demonstrate the importance the Group places on fostering a solid sense of belonging, which facilitates and nurtures employee motivation. Open-Ended Permanent contracts exceed 90% of the total.

The adoption of part-time contracts, granted to mothers until the child completes 3 years of age, represents a valid tool for ensuring the Group's employees can maintain greater balance between private and professional lives (work-life balance). In 2019, about 20% of employees availed of this type of contract, enjoying the same company provided employee benefits and welfare services as full-time workers.

Employees by employment contract type (no)

2019 2018 2017


Open-Ended Permanent

3,110 5,144 8,254 2,876 4,579 7,455 2.830 4,521 7,351

Fixed Term Temporary

303 507 810 341 410 751 243 461 704

Total 3,413 5,651 9,064 3,217 4,989 8,206 3,073 4,982 8,055

WomenMen

2000

3000

4000

5000

1000

more than 30 years

between 20 and 30 years




less than 2 years

Employees by length of service and gender (no) in 2019

179

1,287 1,1761,514

4,366

44365 849 908

1,707

438 441

735

606135

177

542

2,659


ATTENTION TO THE WELLBEING OF ALL PERSONNEL

For the Armani Group, it is essential to ensure that each and all employees are offered a stimulating place in their respective work environments, which is respectful of their individual needs and where they can calmly and peacefully perform their duties and activities.

Diversity and Equal Opportunities

Defending the dignity of the person is a prerequisite for creating a motivating and stimulating workplace, founded on trust and loyalty. For this reason, the investments made over time with respect to management of diversity and protection of equal opportunities are among the Group's key priorities. In 2019, the Armani Group actively participated in the HR & Education round table of the Camera Nazionale della Moda Italiana, National Chamber of Italian Fashion, which among other initiatives undertaken, led to the drafting of the manifesto Including Diversity. Starting from the concepts of ethnicity, gender, sexual and religious orientation, age, mental and physical abilities, as well as socio-economic conditions, the manifesto sets forth a pathway for transformation of company policies such as to make them inclusive.

Welfare Measures

By way of a significant contribution to employee wellbeing a host of welfare services and initiatives are in place that allow for substantial enhancement in the living and working conditions for all personnel; these include, for example, the set of special agreements entered into with commercial establishments or companies that provide health and related services. This category includes the Armani People Care welfare plan, launched at the end of 2018. Intended for employees hired on open-ended permanent contracts by the companies Giorgio Armani SpA, Giorgio Armani Retail and Alia, the Plan extends support to employees and their families, with a budget to be spent on activities dedicated to leisure and sport, travel/holiday packages or on home care services or medical and school expenses. Starting as of January 2019, a dedicated portal has been made available through which employees have the possibility to select some services or request reimbursements for themselves and their families. Employees of Giorgio Armani Operations were able to choose to receive the performance bonus in cash or to convert it into Welfare or supplementary social security and retirement benefits.In addition to this there are initiatives to support and aid parenting, such as the Armani Junior Summer Camp, which during the school closing period allows employees' children to participate – at discounted pricing – in a summer camp dedicated to basketball, that is led and managed by qualified instructors and special guests from the A|X Olimpia Milano team. Finally, a social security consulting and assistance service was made available to employees.

Safeguarding Employee Health

As of 2005, the Armani Group has decided to supplement the insurance coverage for occupational and non-occupational accidents by also adding free health coverage for all employees, with the possibility of extending it, at a reduced rate, to the nuclear family unit. In addition, a free Check Up programme offering the possibility of an annual health check has also been established.

At the end of the year, the inclusion of Life insurance coverage effective as of 2020, was also communicated to employees. This policy, intended for all employees (non-managers), provides for the payment of a compensatory amount to employees’ heirs in the event of death due to illness.


Leisure Time

One of the most successful initiatives implemented by the Group is the opening of the company gym Armani/Fitness, inaugurated in June 2019 at the Milan headquarters in Via Bergognone 38, this is a space created specifically for performing physical fitness and sports activities. Furthermore, the many benefits that employees can enjoy also include the offer of two free tickets to watch the matches of the Pallacanestro Olimpia Milano, the basketball team, and the opportunity to avail of an instalment payment scheme through payroll for purchase of public transport season tickets. Last but not least, staff can expect to enjoy discounted employee pricing at Group-owned stores on apparel and accessories, moreover with further access during the year, also extended to family members, to extraordinary sales of clothing and accessories from previous seasons.

Fostering Engagement in the Company

Efficient internal communication is a key element for ensuring the proper functioning of every organisation, in that it serves to facilitate and encourage the engagement of all personnel and keep them updated with respect to the Group's objectives to be achieved, and the results obtained.The main tools deployed for this purpose are the Armani Intranet and Internal Communications, through which employees are kept informed about the main organisational-level changes, as well as of the Group's issues, initiatives and projects. One section of the company intranet is dedicated to CSR issues, with a view to ensuring heightened awareness and greater knowledge among employees about the Group's commitment to sustainability and the relevant results achieved.

GROWTH WITHIN THE GROUP

Within the Armani Group a range of opportunities for skills development and professional growth are available and aimed at all categories of employees.The training related initiatives are founded on four main aspects, designed to promote the development of cross-functional and transferable skills that are useful for both corporate and personal growth:

• meritocracy for enhancing and valuing excellence;• leadership and passion for effectively managing change and people;• ambition as a constant aspirational attitude that is desirable;• performance excellence as a goal.

The activities are promoted by the Training & Development (T&D) office and cover various areas, ranging from information technology to linguistic and managerial training.

In order to ensure the development of suitable offerings that meet high quality standards, in addition to the T&D office, qualified professionals in the sector, specialised consulting firms and schools are also involved.

Employees involved in training activities (no)

2019 2018 2017


Senior Execs/Top Mgt

117 134 251 100 119 219 47 49 96

Supervisory-Managerial

483 529 1.012 374 405 779 290 301 591

Employees 357 811 1,168 246 467 713 285 657 942

Salesforce 1,331 2,181 3,512 1,165 1,507 2,672 1,226 1,678 2,904

Workers 176 371 547 107 180 287 94 427 521

Total 2,464 4,026 6,490 1,992 2,678 4,670 1,942 3,112 5,054


THE TRAINING OFFERING

The Group’s training offering is very broad and diversified, indeed serving the goal of providing for employee growth and development in line with company objectives, and creating strong team spirit that generates productive synergies.

This also explains the company’s ability to attract and retain the best human capital, to which its growth is directly linked.

The training offering plans are focused on developing:

• Cross-functional and transferable skills such as public speaking, negotiation, conflict management and communication. The training courses on these aspects also include team building initiatives, especially in support of corporate reorganisation processes;

• Technical and professional skills and competencies such as language courses and IT courses, managed by external experts or internal coaches and teachers, and conducted both in groups and individually.

Induction of New Employees

An Induction day organised for all new hires, is aimed at augmenting knowledge about the Armani Group.

The corporate Induction day, known as Armani/WOW (Welcome to Our World), includes an in-classroom presentation of the Group, a guided tour of the Armani/Silos space, a short convivial break for lunch and a visit to the retail outlets in Milan and to the Armani/Hotel.

At the end of the Induction day, the newly hired employees receive a welcome bag which also contains the Welcome Book, an actual book containing useful information compiled on the company’s story and evolution.

Hours of Training per Employee, by Gender and Professional Category

11AVERAGE HOURS OF TRAINING PER

EMPLOYEE

WOMEN

SENIOR EXECS/TOP MGT

SUPERVISORY-MANAGERIAL

EMPLOYEES SALESFORCE WORKERS

MEN

11 12

16 17 8 12 6

86 | THE PEOPLE OF THE GROUP


Armani Development Program

Starting in 2018, a training programme was developed that is dedicated to the company's young talents under 35, who are selected by the managers and the Human Resources Department.

Closely supported by tutors from the relevant corporate functional areas, in 2019 the participants were divided into subgroups and worked on projects related to Corporate Social Responsibility, Marketing dedicated to Millennials and Digital Communication.

The resulting deliverables were presented to a committee, which chose the best project.

The projects were then presented to the Presiding Board, who assessed their feasibility and approved most of them, demonstrating appreciation for the concreteness and value of the work of the young talents. Participants in the Armani Development Programme (A/DP) were then placed in ad hoc, individual and group training courses.

The next edition of the programme, which will focus on creative themes, is in the development and planning stage.

Armani Retail Development Program

In the wake of the success of the Armani Development Programme, a programme dedicated to talents working in the Italy based company-owned stores of the Armani Group was inaugurated in 2019. The objective is to identify the most talented and capable individuals to be initiated into managerial roles in the Group's stores.

The programme, following successive selection phases, has resulted in the selection of fifteen candidates with skill sets deemed suitable for growth into managerial roles. From the start of the programme, the participants were rotated to stores other than the original store to which they belonged, so as to gain a job rotation experience and all-round knowledge of sales processes. During the six months of stay at the new store, specific training sessions were organised at the Giorgio Armani headquarters, facilitated by colleagues from the Retail Management Department. At the end of the programme, the participants would be able to fill managerial positions in one of the Giorgio Armani retail outlets in Italy.

The next edition of the A/RDP will be extended to cover an international dimension, including participants from all company-owned stores based in Europe.

The Armani Talent Project

In 2019, as part of the activities of the A/DP, the Top Management of the Group invited the involvement of a select group of young talents with the aim of gathering stimulating input on how the themes of sustainability could become increasingly part of the Group's identity.

After an initial theory-oriented training phase, the participants were requested to carry forward the concrete development of some products that respond to the sustainability requirements sought by the market.

For each phase of the development process — from the choice of raw materials, to the definition of the technical, stylistic and economic aspects of the product and finally to the creation of the communication campaign for the launch — environmental, social and economic sustainability was at the centre of the decision-making process.

The excellent results produced indeed served to demonstrate that the creation of sustainable alternatives is not only possible, but also has the potential to open up new development opportunities in the fashion world.


Sales Personnel

Various training programmes are dedicated to the wholesale and retail sales force focusing on the product and on the quality of customer service, in order to ensure the alignment of service levels with company standards. A section has been introduced on the company intranet portal, available to the sales personnel, which holds a compilation of documentation —videos and presentations— both on the permanent themes of the Group and on the collections and seasonal capsules.

The most important phase of customer oriented training is the Masterclass, which comprises two days of meetings at the headquarters of the Group, organised with the aim of presenting the collection and the stylistic, technical and functional characteristics thereof, and for enhancing the ability to respond with competence to the questions and needs of clients.

Added to the foregoing are ad hoc training offerings in preparation for events such as Trunk show, Informal modelling and Styling sessions, which, in different ways, serve to enable the presentation of the collection directly in the store or in dedicated locations and to satisfy the needs of the different markets.

Leadership Development and Personnel Management

The Group supports personal skills development of managers and functional positions responsible for managing resources. The objective is to enhance, value and develop the talents in one’s team, in order to improve their performance and express their own leadership in a targeted and effective manner, while setting themselves up as an example for co-workers and colleagues.Over due course, the leadership development training offerings have been expanded and diversified: there are programmes for People Managers and Project Managers, both at basic and advanced levels, the latter being provided for the first time in 2019.

Individual Coaching and Team Coaching

Individual coaching is specifically intended for managers, and designed to promote and support their professional growth, thus facilitating the achievement of corporate objectives. The coach defines the individual goals and objectives to be consistent with those of the Group thereby providing for the possibility to achieve improvement both in terms of performance and management of the available resources. Unlike individual coaching options, the purpose of Team Coaching instead shifts focus on promoting the development and growth of a group of individuals. Yet again, external professionals are enlisted to help the groups, the aim being to improve communication methods and processes among team members, strengthen motivation and the propensity to collaborate towards achieving common goals.

Learning Management System

2019 also saw the initiation of the project for implementation of a Learning Management System, which is a platform that will make it possible for the Training & Development team to: communicate the training offering; provide access to digital courses; and manage online and offline training in the company. The project anticipates the launch of the Learning Management System in April 2020.


HEALTH AND SAFETY OF OUR PEOPLE

Ensuring workplace health and safety of employees is one of the Group's key priorities, which on an ongoing basis sets in motion resources for prevention and training activities, in order to minimise the risk of accidents.

In 2019, the scope of reporting was extended to cover all the consolidated companies of the Armani Group also with regard to data related to the health and safety of workers. Given that the scope of reporting of the 2018 data included exclusively the Italian companies of the Group, in order to avoid incoherence or inconsistency in the comparison between the two years, the following tables show, for the year 2019, both the data pertaining to the new scope of reporting and to the previous scope.

Risk Analysis and Employee Training

The first step for ensuring effective protection of health and safety in the workplace is prevention of accidents, which is in turn based on identification and analysis of risks. This is achieved by considering the specificities of the various operational locations of the Group, from Production Sites to sales outlets. Only after accurately identifying the risks, in fact, is it possible to plan and implement the appropriate measures necessary for monitoring thereof, e.g. from periodic health surveillance of the personnel to structural interventions designed to improve the working environments.

This second type of measures particularly concerns the Production Sites that are characterised by higher potential exposure to risk of accidents; for this reason over the years these sites have undergone numerous renovation operations related to improvement of structures and machinery. These include for example, the installation of ventilation and dust extraction systems, and modern systems for checking electrical systems.

The actions for monitoring and structural improvement are accompanied by constant training for all employees, which is essential to ensure they are well-informed and knowledgeable about: the existing risks, the procedures for the prevention of accidents, and the behaviours to be adopted in the event of occurrence thereof.

This training is conducted through specific courses and constant updates; they differ in accordance with the various respective company roles, the functions and tasks that the employees perform, and the machinery and equipment with which they consequently come into contact, these being the determining factors on which the relative degree of risk exposure depends.

Special courses are also provided for particular functional positions, such as First Aid Officers.

Monitoring and Indicators

With a view to ensuring both effectiveness of the measures adopted and compliance with the health and safety procedures introduced, the Armani Group has instituted a control system since 2014 which, through annual audits carried out by a Supervisory Body (SB), verifies these aspects across the various operational locations.

The audits therefore serve the purpose of ascertaining compliance with local regulations pertaining to hygiene and safety in the workplace (register of periodic inspections, analysis of the functions subjected to health surveillance for specific risks), verifying that the interventions carried out are consistent with the findings emerging from the risk analysis, and compliance with regulatory requirements relating to management of tenders (in Italy regulated by Legislative Decree 81/08). While not currently having a validated management system, the Armani Group has implemented a documentation-based system designed to ensure compliance with regulations and norms.

The importance that the Armani Group attaches to the issue of health and safety and the commitment deriving therefrom also translate into the Group’s requiring all third-party companies with whom it collaborates to sign on to the document established for assessment of interference risks, and to ensure prevention in the main activities characterised by high risk (for example, safety in work activities such as driving, ironing services, etc.). Within the health and safety monitoring plan, accident indicators represent a useful element in evaluating the outcomes and results of the prevention measures adopted.

Hours of training on health and safety


2019 2019 2018 2017

Prevention of risks related to the activity performed

6,253 5,158 3,172 8,111

Training - Emergency Mgt Personnel 2,883 1,338 906 2,154

Training - Workers’ Safety Reps WSR 1,338 328 832 352

Training - Prevention and Protection Service PPS

1,818 40 32 228

Other 392 280 - -

Total 12,684 7,144 4,942 10,845


Health and safety indicators


Information Unit of measure 2019 2019 2018 2017

Accidents/injuries at work

number 148 20 23 14

Accidents/injuries in transit

number 44 34 22 19

Fatal accidents/injuries at work

number - - - -

Fatal accidents/injuries in transit

number - - - -

Cases of occupational illnesses

number 5 2 1 6

Working days lost due to accident/injury (in transit) days 959 892 632 627

Working days lost due to accident/injury (at work) days 2,142 379 682 446

Hours worked hours 15,351,753 4,888,615 4,449,901 5,080,629

Employees number 9,064 3,045 3,122 3,066

Health and safety Indicators

Incidence rate6 16.3 6.57 7.37 4.57

Severity rate7 0.14 0.08 0.15 0.09

Rate of work-related illnesses8

0.07 0.08 0.04 0.24

Accident/injury frequency9 9.6 4.09 5.17 2.76

6 The incidence rate indicates the number of accidents/incidents occurring in a year; it is calculated as follows: the number of accidents/injuries (excluding those in transit) multiplied by 1,000 divided by total number of employees.

7 The severity rate relates the severity of the accident/injury to the measurement of risk exposure; it is calculated as follows: the number of working days lost due to accident/injury (excluding those related to accidents/injuries in transit) multiplied by 1,000 divided by total number of hours worked.

8 Rate of work-related illnesses correlates the number of work-related illnesses to the measurement of risk exposure; it is calculated as follows: the number of work-related illnesses multiplied by 2,000,000 divided by total number of hours worked.

9 The frequency of accidents/injuries correlates the number of accidents/injuries with the measurement of risk exposure; it is calculated as follows: the number of accidents/injuries (excluding those in transit) multiplied by 1,000,000 divided by total number of hours worked.

FOCUS ON THE CUSTOMER | 97 96 | FOCUS ON THE CUSTOMER

The Group’s relationship with its customers is founded on transparency and reliability, as ensured through the careful planning of all aspects that, directly or indirectly, could affect the perception of the brand.

Augmenting the level of satisfaction of customers is a delicate and complex operation, which relies on multiple factors to bear fruit: above all, the company's ability to establish a relationship of trust, and the possibility of delivering an overall shopping experience that is exclusive and satisfying, wherein product excellence itself is indeed promoted and enhanced.

Furthermore, it is essential to adopt the appropriate measures designed to secure the authenticity of the products placed on the market, so as to protect the values of the brand and the customers who believe in them.

FOCUS ON THE CUSTOMER


THE CUSTOMER EXPERIENCE

The Armani Group devotes utmost attention to prioritising the careful planning and management of the aspects that, directly or indirectly, can influence the consumer's perception of the brand and affect their shopping experience.

The first step towards establishing an exclusive, direct and personalised relationship with the client is the mapping of the customer journey, that is, analysing the customer’s itinerary while completing their purchasing experience, from the first contact with the Group until the moment when they establish a relationship with the sales personnel, serving as spokesperson for the brand.

Every moment of contact is studied in minute detail in order to satisfy the needs and expectations of the client. All necessary measures are also adopted to ensure that the customer receives the same type of service regardless of the channel of interaction used, whether physical, in-store, or digital.

This is accompanied by all the initiatives undertaken to establish and consolidate an exclusive relationship with customers and potential customers. This includes the distribution of catalogues, communication of new collections and ad hoc messages on the occasion of special sale offerings, as well as invitations to participate in specific events organised both within and outside of retail outlets.

Given the strategic importance of this process, starting in 2018 a special team dedicated to the Customer Experience was established, and further enhanced in 2019. The team is responsible for defining the fundamental elements necessary to ensure the customer enjoys an unforgettable experience while in the Armani world, and for training the sales personnel on these issues.

COMMITMENT TO ENSURING ONGOING CUSTOMER SATISFACTION

is based on two fundamental points: the continuous training of sales personnel, referred to in the chapter "The People of the Group", and the adoption of new ideas and state-of-the-art technological tools that facilitate and enhance interactions with customers.

Continuous training of sales personnel

Innovative tools to enable and facilitate interactions with customers

Armani Green Outlets

Attention to sustainability cuts across all functional and operational areas: starting from the product right through to the place where it is presented. The Group's boutiques and points of sale play a fundamental role in representing and communicating the brand identity and values, including the commitment to sustainability. In this context, the Group has developed an innovative concept that has been applied for the first time in 2019 to the Armani Outlets in Sanremo and Hong Kong and which will be extended to all the outlets due to open in the future.

The essential structures are constructed from materials a portion thereof being recycled and recyclable at the end of life. The insulation system is comprised of natural materials applied to the internal walls, which enable containment of energy consumption both during summer and winter. The pieces of furniture consist of modular, sectional or component-based, and self-supporting or freestanding structures. The panels are made of natural iron, a completely recyclable material. The wood and fabric finishes are derived respectively from wood and textile waste; some characteristic elements are constituted from solidified paper pulp and regenerated nylon. The ceiling is made of aluminium battens, assembled in a manner such as to minimise the use of resources for management of the systems as well as for any maintenance interventions.

This ambitious project is part of the virtuous path being trod by the Armani Group with a view to promoting sustainable development and a circular economy. Through the shopping experience in Green Outlets, the Group aspires to make customers active participants in its sustainability journey and raise awareness towards environmental issues.


PRODUCT LABELLING

The Group's products are distributed in various markets around the world, each governed by specific norms and regulations with respect to labelling. Given that the issue is subject to a constantly evolving regulatory context, combined with the multiple references offered, it is essential to adopt an extremely versatile labelling management system.

The determination of the informational content to be reported in each label is centralised at Group level, so as to ensure uniformity of the data. These are then transmitted to all operations, together with updates relating to new requirements of the market or to any customisation requests from clients.

To facilitate the management of the various data flows, the Group has developed a specific software application thanks to which it is possible to monitor all the various types of labels applied to the products sold in a specific market and/or to a specific client.

With a view to continuous review and improvement, a study was also launched to support further rationalisation of the labelling related data with the objective of minimising use of labels intended only for specific markets.

Finally, starting from 2018, the Group has developed internal guidelines for the management of mandatory and voluntary communications regarding environmental safeguards to be affixed to the packaging, based on the regulations in force in the various reference markets. The guidelines specify, for each material managed by the Group and for each market served, both the minimum informational prerequisites as stipulated by national or international regulations, and the indications necessary to formulate the voluntary environmental communications. This includes, for example, the indications as to the material, correct disposal, possible recyclability and/or the recycled content of the packaging.

Thanks to the scrupulous management of the issue under consideration, in 2019 the Group did not receive any sanctions in respect of product labelling, nor any challenges or objections to the environmental claims affixed to the packaging.


ENSURING CLIENT DATA PROTECTION & PRIVACY

Ensuring the security of buyers’ personal data is one of the priorities for the Armani Group, as indeed confirmed by the materiality analysis.

Following the entry into force on 25 May 2018 of the new EU Regulation no 2016/679, on the protection of natural persons with regard to the processing of personal data (i.e. "GDPR" or "General Data Protection Regulation"), the Armani Group has initiated a series of internal activities in order to become compliant therewith and respond promptly to the regulatory and legislative provisions. Already effective as of 2018, all the necessary measures have been activated to ensure oversight, at Group level, of the personal data management model and the coordination of all the activities necessary for the application of the data protection legislation undertaken by the registered offices in the various European countries. In 2019, the Group continued to update the data processing registers and the information on the processing of personal data provided to the various categories of individuals concerned.

Moreover, the e-mail address [email protected] also continues to remain active and available to customers of the Group and to all other interested parties for reporting any breaches or communicating requests regarding confidentiality, identity and personal data protection.

The reliable and stringent system put in place for the management of data protection has ensured that during 2019 there were no reported cases of personal data related violations or non-compliance with regard to the processing of the same.

PROTECTING THE BRAND

Being fundamentally committed to securing the authenticity and value of its products, the Armani Group has always been active in protecting its intangible assets and in the fight against counterfeiting, dedicating ample resources to the protection of Intellectual Property (IP) rights and collaborating with leading national and international associations in the sector.

Protection of intangible assets is accomplished by undertaking two fundamental activities: the registration of Intellectual Property rights such as trademarks, patents, industrial designs; and ensuring protection thereof under the jurisdictions of the respective administrative and judicial offices worldwide. Achieving these objectives is also possible thanks to the activation of customs surveillance services in most industrialised countries.

The activities in question are entrusted to the anti- counterfeiting team and the Intellectual Property Department of the Group, comprised of professionals registered in the Albo dei Consulenti in Proprietà Industriale (Italian Register of Industrial Property Consultants), as well as Authorised Representatives before the Office for Harmonisation in the Internal market (OHIM), and paralegal resources.

During 2019, this commitment was evident in the highly conspicuous protection and anti-counterfeiting operations deployed.

The adoption of the CERTILOGO® system across the Group’s various lines represented a valuable contribution — thanks also to the direct involvement of consumers — to the usual activities carried out by the Group in this area, such as education and training for customs authorities in countries where an active surveillance system exists and investigative activities in the internet domain, through brand protection tools.

104 | FOCUS ON THE CUSTOMER

The Certilogo® Authentication Platform

Starting from 2017, customers of the Armani Group have the ability to contribute to the process of authentication of the Group's products through a common smartphone or any other device connected to the internet.

The Group has developed in partnership with Certilogo® a technological solution that, by scanning the QR Code present on the material composition labels of the apparel items, allows to verify the authenticity of the apparel item itself, by accessing a specific information section on the websites attributable to the Group.

The data generated by the scans may be used not only as a countermeasure against counterfeiting but also to identify possible fraud, theft, any eventual problems in the supply chain, or for monitoring the parallel market and, last but not least, to improve the product offering to the final consumer.

The system is now active on products of the lines Emporio Armani, EA7 and A|X Armani Exchange.

During 2019, the project collected more than 350,000 authentications in 190 countries.

Fighting Against Counterfeiting

In 2019 the customs surveillance service and the on-the-ground raid activity produced the following outcomes:

The Group's anti-counterfeiting activity achieved very positive overall results in China, Tunisia and Europe in general.

About 3,000 seizures worldwide, in particular in Italy, Germany, Russian Federation, Great Britain, China, Romania, Turkey, France, Spain and Poland

Shut down of over 5,000 websites dedicated to the marketing of counterfeited products

Removal of almost 50,000 ads for the marketing of counterfeited products on digital platforms (marketplaces), achieving 99% compliance

Reporting violations against almost 4,500 pages on social media, achieving over 97% compliance (shut down)

FOCUS ON THE CUSTOMER | 105

THE COMMUNITIES WE SUPPORT | 107106 | THE COMMUNITIES WE SUPPORT

The Armani Group has always considered itself to be an integral part of the territory and the communities within which it operates.

Over time it has built solid relationships with the world of culture, institutions, and humanitarian associations, extending active support to projects and initiatives that are consistent with its own core values.

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108 | THE COMMUNITIES WE SUPPORT

EXTENDING SUPPORT TO THE TERRITORY AND COMMUNITIES

The Armani Group has always promoted initiatives in support of the local communities and supports the associations operating in the region with concrete actions and contributions.

Over the years there have been numerous interventions by way of contributing towards safeguarding of the cultural and artistic heritage and protection of the environment.The dialogue and collaboration with the Fondo Ambiente Italiano (FAI), Italian Environment Fund, have been ongoing for many years and have made possible the restoration and opening to the public of some of the most important cultural assets of the Foundation. The Armani Group is part of "I 200 del FAI", the historical group of original major donors of the Fund.

On an ongoing basis moreover, the Group, both locally and internationally, remains attentive to the needs of the segments of the population that are disadvantaged or in difficult circumstance and directs concrete actions at the most problematic situations, thereby responding to the need to give back for what it receives from the communities in terms of the territorial, labour, and other resources.

Also in 2019 it confirmed its support for the Associazione Opera San Francesco per i Poveri (San Francesco for the Poor Association), which in Milan offers various

THE COMMUNITIES WE SUPPORT | 109

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services to the homeless and people in difficulty, including: free community kitchen, medical clinic, shower service, and clothing exchange wardrobe. As its first concrete action, the Giorgio Armani Foundation decided to support OSF in the organisation of a fundraising concert at the Teatro alla Scala di Milan to celebrate its 60th anniversary in operation.

INITIATIVES FOR MEDICAL AND SCIENTIFIC RESEARCH

The Group, which invests in research as a fundamental element of development for its own business activity, also supports medical-scientific research with equal conviction: for years, funding has been provided and donations have been made to support the best young Italian researchers with research scholarships and research projects and assistance.

The collaboration with the Fondazione Veronesi (Veronesi Foundation) is renewed every year, and in 2019 was again targeted at the Gold for Kids project dedicated to treatment protocols for paediatric oncology.

The Armani Group also supports the oncology studies of Humanitas, another major Milanese entity dedicated to life sciences, which is active and recognised internationally.

Organisations and projects supported by

Giorgio Armani Spa

110 | THE COMMUNITIES WE SUPPORT THE COMMUNITIES WE SUPPORT | 111

CULTURE AND CREATIVE INSPIRATION: ARMANI/SILOS

Since its inauguration in 2015, the Armani/Silos space, in addition to being one of the premier exhibition venues of note for the history of Italian fashion, makes available the priceless artistic heritage of Giorgio Armani for the purposes of stimulating research and new ideas in the field of fashion and design, as well as in other creative fields. Armani/Silos strives to reaffirm its identity as an open place integrated within the fabric of the city constituting an integral part of the cultural and educational offering thereof. Silos maintains an ever close collaboration with the Assessorato alla Cultura (Department of Culture), and with the Municipality of Milan, in whose cultural initiatives Silos actively participates and that has granted its patronage to a number of exhibitions hosted at these facilities. To this end, its programme calendar includes extraordinary openings, guided tours, and special installations on the occasion of special days for promoting city museums. In the same vein, the Silos space has participated since its opening in the initiative of the Ministero dei Beni Culturali, Ministry of Cultural Heritage, "Domenica al Museo (Sundays at the Museum)", which involves many museums and public and private exhibition spaces, that are open to the public free-of-charge every first Sunday of the month. In terms of opening to the younger generations, in addition to the temporary exhibitions which also in 2019 provided insightful inputs and interconnections between fashion and the other creative arts, the relationship was maintained with the Faculty of Design of the Politecnico University of Milan, which uses the Silos facilities to periodically hold lectures and organise visits with groups of Italian and foreign students and researchers. Since its opening, Silos has adopted the mission of focusing attention on talent and a commitment to supporting new generations of creatives. After the initiatives dedicated to fashion, cinema and photography, attention was extended to architecture, with activation of a collaboration with the School of Architecture of the Politecnico. With this in mind, the Milan Arch Week 2019 served to launch the "About Future" project, a collective exhibition of about 50 models of the most significant works created for their theses by the students for their graduation degree. The space at Silos was offered to the students of the Politecnico who were able to exhibit their works and their reflections on the cities of the future in collaboration with their professors, who curated the concept and staging set up.With the same purpose, during Photo Week, Silos hosted a conversation event on architectural photography that was open to the public, and led by the architect Giovanni Hänninen.

“I conceived the Silos as a place that would promote creativity and be a stimulus for new ideas, encouraging young people to express themselves. I am pleased to provide a space to the students of Architecture of the Politecnico for this exhibition that is so rich in meaning, which makes us reflect on important issues such as sustainability and innovation. I was struck by the ability of these young people to look to the future, without forgetting their origins."

G. Armani


ACQUA FOR LIFE

Finally, the major environmental and social project Acqua for Life (AFL) has continued for ten years.

AFL is the Armani Group initiative that focuses on universal access to water in regions affected by water scarcity. The project was launched in 2010, the year in which the United Nations recognised the right to water and sanitation services as a basic human right.

To date, AFL has invested approximately 9 million euros for water projects around the world with the result that over 200,000 people in 15 countries on 3 continents have been able to access safe water sources.

For the second decade of the initiative, 8 new projects have been announced with the scope of countering the problem of polluted water, strengthening awareness and knowledge of the critical issues, supporting improvement and maintenance of structures and facilities for access to potable water and education with respect to the use thereof.

“Water is perhaps the element to which I feel closest; for me water represents life and regeneration, but also calm and serenity. Access to clean water is undoubtedly one of the greatest challenges of the 21st century."

G. Armani

Since its inception the project has adopted a global approach which effectively translates into concrete results:the main activity consists in the installation of water supply points and latrines, in addition to the collection of rainwater, water filtration, and water purification systems in areas lacking such facilities.

In parallel, the programme focuses on education and awareness with regard to behaviours concerning water, hygiene and sanitation services in order to maximise the sustainability of the projects and their long-term impact on communities.

All projects are designed to be active for at least three consecutive years and created in a manner such that they can continue to serve the communities. To this end, the AFL projects always include an investment earmarked for training and maintenance of the water structures even after conclusion of the project.

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THE NON-PROFIT ACTIVITIES OF OLIMPIA MILANO BASKETBALL CLUB

The Pallacanestro Olimpia Milano professional basketball team was founded in 1936 as Dopolavoro Borletti. After an initial sponsorship participation, Giorgio Armani eventually bought the team in 2008, deploying a plan of investment and strategic choices that, over time, will lead the team to effectively playing a leading role in basketball at the Italian national and European levels.

Over the years, Olimpia Milano has shown itself to be an enterprise always attentive to ensuring respect of those ethical principles which, in sport, support and facilitate the achievement of a healthy and enduring growth path. In confirmation of this, and of the principles contained in the Internal Regulations, the team has obtained the Ethics in Sport Certification "Esicert" issued by Bureau Veritas. Cognisant of being role models for many young people and fans, the athletes are committed to ensuring that collaboration and responsibility do not remain only theoretical concepts. The club devotes particular attention to the youth sector with the objective of promoting the culture and healthy principles of sports among children. Numerous initiatives have been undertaken in this regard, ranging from sports training for children and young people to fundraising and support actions for local sports undertakings. Indicated here below are some of the most significant projects.

Armani Junior Program

A project that links 110 amateur basketball clubs to Olimpia Milano.For the benefit of these companies and with their cooperation, events are organised to promote basketball and the values linked to Olympia.

Olimpia@school

A project conceived and implemented by Olimpia Milano in collaboration with the Ufficio scolastico regionale - Ambito di Milano, Regional Education Authority, Milan Area. The project is reserved for upper-level (II grado) secondary schools in Milan and the Metropolitan City of Milan and aims to enable adolescents from Milan schools to engage more closely with the world of sport, not only with a technical but also an educational approach, with a vision oriented to the world of work and to the activities and experiences occurring around a sports club.

It involves a training programme that immediately conveys important values:from respect for the rules to healthy competition, from respect for the opponent to integration with the sense of belonging and team spirit, consequently enhancing the individual potential of each individual student.


Olimpia Challenge & Olimpia Challenge Baskin

The "Olimpia Challenge" project inaugurated in 2019 was conceived to provide young people with the opportunity to live the experience of true basketball professionals.Before the official championship matches of the A|X Armani Exchange Olimpia Milano, the teams of the Minibasketball categories belonging to the AJP affiliated clubs have the opportunity to play a mini-tournament directly on the prestigious court at the Mediolanum Forum in Milan. At the conclusion of the tournament, all participants are rewarded with an Olimpia memento. At the end of 2019, to encourage participation and an even more inclusive sports experience, the initiative was also extended to the mixed category of Baskin.

One Team

This is an ambitious project promoted by Euroleague Basketball and major European teams, including Olimpia, which uses basketball to bring about a concrete social impact in our communities. There are mainly four sensitive themes that are sought to be addressed through One Team, as follows:

• Social inclusion• Disability• Gender diversity• Substance abuse

With an innovative model for connection that combines the activities of each club in an integrated way, Olimpia Milano actively contributes to the initiative both through the projects included in the Armani Junior programme, as also through collaboration with local entities. As part of the One Team initiative, Olimpia Milano has undertaken in collaboration with the Fondazione Don Gnocchi di Milano (Don Gnocchi Foundation of Milan), a project seeking to support the rehabilitation of a group of children with Borderline Intellectual Functioning (Funzionamento Intellettivo Limite). The specific rehabilitative activities offered by the Don Gnocchi Foundation were accompanied by a basketball course with the coaches of the Olimpia Milano youth sector, with the dual aim of helping the children improve their motor planning skills while also serving to incentivise motivational and relational aspects of the game.

Olimpia Gioca Con Te (Olimpia Plays With You)

From November to April 2019, the players of A|X Armani Exchange Olimpia Milano participated in a series of ‘meets’, events hosted in the gyms of the AJP affiliated clubs where the team members spend an entire afternoon together with many young to very young athletes, remaining available for games, photos and autographs.

"Fieri Guerrieri" Cheering School and "Io Tifo Positivo"

The "Fieri Guerrieri” (Proud Warriors) cheering school, developed together with the "Io Tifo Positivo” (I Cheer Positively) project of the Comunità Nuova Onlus, seeks to: teach and promote mutual respect, promulgate the values of sport as providing inspiration for human relationships, restrict the phenomenon of team cheering to only the venues and times of the sport, offer to young people a sustainable model of team cheering.A wonderful opportunity offered to boys, girls and their parents, it is intended to enable them enjoy a concrete experience of positive cheering, fun, friendly congregation, and sporting passion, with the hope of making young people and adults develop a love for basketball.

118 | NOTA METODOLOGICA METHODOLOGICAL NOTE | 119

METHODOLOGICAL NOTE

This document represents the fifth annual edition of the Armani Group Sustainability Report.

The 2019 edition brings with it two major new developments, evidence of a continuous improvement and growth path: the extension of the scope of reporting considered to all Group companies and the direct involvement of stakeholders in identifying the issues to be reported in the document itself.

The Group's sustainability performance was reported in accordance with the procedures set out in the Sustainability Reporting Standards published by the Global Reporting Initiative (core option). To this end, various indicators were selected such as to enable describing the trends of the material aspects and relations with stakeholders.

For some of the material issues it was not possible to identify, within the GRI Standards framework, adequate indicators to describe and report the real position of the Group. In these cases, the “freedom of expression” option was chosen, reporting exclusively GRI 103: Management Approach 2016. For a better understanding of the Standard Disclosures used, the “Content Index” is provided in the Appendix.

As compared to the previous document, the scope of reporting considered has been extended to include all of the consolidated companies of the Group in respect of all the information and indicators declared.

The information and indicators are reported annually and refer to the calendar year 2019. Where possible, the 2019 data was compared with those of the two previous years (2017 and 2018) in order to provide the trends of the last three years. To facilitate comparison, some indicators (explained throughout the document) were calculated also considering the scope adopted in 2018.

The expansion of the scope of reporting considered has led to the need, in some cases, to adopt assumptions to compensate for the lack of data and specific information regarding the Group's operational locations.

The document has not been subjected to third party review.

For additional information regarding the contents of the Report, the CSR office may be contacted by e-mail at: [email protected].

120 | CONTENT INDEX

GRI STANDARD DISCLOSURE PAGE OMISSIONS

GRI 101: Reporting principles 2016

GENERAL DISCLOSURES

GRI 102: General disclosures 2016

102-1 Name of the organisation 24 -

102-2 Activities, brands, products and services 12-14; 28-29 -

102-3 Location of headquarters 24 -

102-4 Location of operation 17 -

102-5 Ownership and legal form 24-25 -

102-6 Markets served 17 -

102-7 Scale of the organisation 10; 17 -

102-8 Information on employees and other worker 10; 76-81 -

102-9 Supply chai 52-57 -

102-10 Significant changes to the organisation and its supply chain suppl 52-57 -

102-11 Precautionary principle or approac 31 -

102-12 External initiatives 108-117 -

102-13 Memberships of associations 11; 39; 108-117 -

102-14 Statement from senior decision-make 5 -

102-16 Values, principles, standards and norms of behaviou 30 -

102-18 Governance structur 24-25 -

102-40 List of stakeholder groups 46 -

102-41 Collective bargaining agreements - omitted for confidentiality

102-42 Identifying and selecting stakeholder 46 -

102-43 Approach to stakeholder engagemen 46-47 -

102-44 Key topics and concerns raised 48-49 -

CONTENT INDEX

CONTENT INDEX | 121

GRI 102: General disclosures 2016

102-45 Entities included in the consolidated financial statements 25

102-46 Defining report content and topic Boundaries 119

102-47 List of material topics 40; 49

102-48 Restatements of information 119

102-49 Changes in reporting 119

102-50 Reporting period 119 -

102-51 Date of most recent report 119 -

102-52 Reporting cycle 119 -

102-53 Contact point for questions regarding the report 119 -

102-54 Claims of reporting in accordance with the GRI Standards 119 -

102-55 GRI Content Index 120-124 -

102-56 External assurance 119 -

MATERIAL TOPICS

ECONOMIC PERFORMANCE

GRI 103: Management approach 2016 103-1, 103-2, 103-3 32 -

GRI 201: Economic performance 2016

201-1 Direct economic value generated and distributed 32; 35

ANTI-CORRUPTION

GRI 103: Management approach 2016 103-1, 103-2, 103-3 30-31 -

GRI 205: Anti-corruption 2016

205-3 Confirmed incidents of corruption and actions taken 31 -

ANTI-COMPETITIVE BEHAVIOUR


GRI 206: Anti-competitive behaviour 2016

206-1 Legal actions for anti-competitive behaviour, anti-trust and monopoly practices 31 -

122 | CONTENT INDEX

RAW MATERIALS (FREEDOM OF EXPRESSION)


ENERGY CONSUMPTION

GRI 103: 2016 Management approach 103-1, 103-2, 103-3 70; 72 -

GRI 302: Energy 2016 302-1 Energy consumption within the organisation 72 -

WATER CONSUMPTION

GRI 103: Management approach 2016 103-1, 103-2, 103-3 70; 71 -

GRI 303: Water 2016 303-1 Water withdrawal by source 71 -

EMISSIONS IN AIR


GRI 305: Emission 2016

305 – 1 Direct (Scope 1) GHG emissions 72 -

305 – 2 Energy indirect (Scope 2) GHG emissions 72 -

COMPLIANCE WITH ENVIRONMENTAL STANDARDS


GRI 307: Environmental compliance 2016

307-1 Non-compliance with environmental laws and regulations 31 -

SUPPLIER ENVIRONMENTAL ASSESSMENT


GRI 308: Environmental assessment of suppliers 2016

308-1 New suppliers that were screened using environmental criteria 56-57 -

CONTENT INDEX | 123

EMPLOYMENT POLICIES


GRI 401: Employment2016

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

81 -

OCCUPATIONAL HEALTH AND SAFETY


GRI 403: Occupational health and safety 2018 403-9 Infortuni sul lavoro 95 -

EMPLOYEE TRAINING


GRI 404: Training and education 2016

404-1 Average hours of training per year per employee 86 -

DIVERSITY AND EQUAL OPPORTUNITIES

GRI 103: Management approach 2016 103-1, 103-2, 103-3 30; 82

GRI 405: Diversity and equal opportunity 2016

405-1 Diversity of governance bodies and employees 78-81

NON-DISCRIMINATION


GRI 406: Non-discrimination 2016

406-1 Incidents of discrimination and corrective actions taken 30 -

CHILD LABOUR


GRI 408: Child labour2016

408-1 Operations and suppliers at significant risk for incidents of child labour 52 -

FORCED OR COMPULSORY LABOUR


GRI 409: Forced or Compulsory Labour2016

409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour

52 -

124 | CONTENT INDEX

HUMAN RIGHTS ASSESSMENT


GRI 412: Human Rights Assessment 2016

412-1 Operations that have been subject to human rights reviews or impact assessments 54-57 -

LOCAL COMMUNITIES (FREEDOM OF EXPRESSION)


SUPPLIER SOCIAL ASSESSMENT


GRI 414: Social assessment of suppliers 2016

414-1 New suppliers that were screened using social criteria 56-57 -

CUSTOMER HEALTH AND SAFETY


GRI 416: Customer health and safety 2016

416-1 Assessment of the health and safety impacts of product and service categories 59; 61

PRODUCT LABELLING AND COMMUNICATION

GRI 103: Management approach 2016 103-1, 103-2, 103-3 -

GRI 417: Marketing and labelling 2016

417-1 Requirements for product and service information and labelling 100 -

CUSTOMER PRIVACY


GRI 418: Customer privacy2016

418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data

102 -

SOCIO-ECONOMIC COMPLIANCE


GRI 419: Socio-economic compliance 2016

419-1 Non-compliance with laws and regulations in the social and economic area 31 -

APPENDIXGeneration and distribution of economic value - effects of

International Financial Reporting Standard 16 (IFRS 16)

Starting from the financial statements as at 31 December 2019, relating only to the consolidated financial

statements insofar as they were drawn up in accordance with the international accounting standards approved

by the European Union, the Armani Group has adopted the international accounting standard document

International Financial Reporting Standard No 16 (hereinafter referred to as “IFRS 16”). The objective of

this accounting standard is to end the practice of distinguishing, in terms of classification and accounting

treatment, between finance lease contracts which appear on balance sheet as financial liabilities, and

operating lease contracts (off balance sheet), including real estate leases. IFRS 16 is applicable with effect

from 1 January 2019 to all rental, property leases and lease agreements that grant to the lessee control and

right to use, without conferring full ownership, in respect of properties and other leased assets. At the time

of initial adoption of the standard and therefore of the initial recognition of the related accounting impact,

and subsequently at the commencement of each new lease agreement and any subsequent renewal, the

rights of use ("Rights of Use") deriving from the agreement are recorded in the Assets under the line item

"Right of Use Assets", while the related lease payable is recorded among the financial liabilities, determined,

with the financial discounting rules, as the net present value of the future obligation to make payments of

the fixed components of rental and leasing fees until the conclusion of the related agreements. For each

agreement, the lessee recognises:

• 1. the lease liability (payable) equal to the net present value of the future lease payments envisaged for

the term of the agreement until the termination of the same; the lease payments are discounted using

the interest rate implicit (eventually charged to lessee) in the lease, if that rate can be readily determined

or, if it cannot be readily determined or is not known —as in fact happens in most real estate lease

agreements— an “incremental” borrowing rate estimated by the lessee or obtained from statistical data

for the sector. The incremental borrowing rate is the interest rate at which the lessee could theoretically

obtain additional financing to purchase the underlying leased asset.

• 2. the asset deriving from the right to use the underlying asset, measured at the net present value of the

amount equal to the lease liability, plus any direct costs and initial lease payments made to the lessor

possibly in a lump sum at the commencement date of the lease, plus an estimate of costs to be incurred

by the lessee in dismantling and removing the underlying asset, and for restoring the site on which it is

located or restoring the underlying asset to the condition required by the terms and conditions of the

lease, unless those costs are incurred to produce inventories (in accordance with IAS 37).

In the statement of comprehensive income, following the application of IFRS 16, the lease payments made

during the year, which remain the basis to determine taxable profit and for internal reporting purposes, are

“replaced” by the depreciation, calculated on a straight-line basis, of the right-of-use asset and the nominal

recognition of the financial expense calculated using the incremental borrowing rate estimated on the

remaining lease payments. This double replacement considerably changes some typical financial indicators

as it reduces operating costs (due to the elimination of fixed lease payments), though it increases depreciation

and nominal financial expense. Therefore, in the income statement prepared in accordance with IFRS 16, the

depreciation includes the amounts related to the effective investments in leasehold improvements, typically

included under the depreciation of property, plant and equipment, and the depreciation of capitalised right-

of-use assets.

APPENDIX | 125

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