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2018

THE ARMANI GROUP AND SUSTAINABILITY

2018

THE ARMANI GROUP AND SUSTAINABILITY

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Sustainable positioning and consistent corporate policy are critical to anyone who plans and manages a forward-looking business.

...For me and my Group, it’s more about ethics than strategy.

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2018 IN NUMBERS

8,206

220

EMPLOYEES WORLDWIDE

7INDUSTRIAL

SITES

1,972MILLION EUROS IN ECONOMIC

VALUE DISTRIBUTED

CHEMICAL TESTS ON PRODUCTS

531COMPANY-OWNED

STORES

2,074MILLION EUROS IN ECONOMIC

VALUE GENERATED

5,000HOURS OF

TRAINING PROVIDED

AUDITS CARRIED OUTAT OUR SUPPLIERS’ FACTORIES

OLTRE

10,000OVER

With over 40 years of business activity, the Armani Group embodies the very essence of Made in Italy. Solidly connected to its Italian roots, the company has experienced steady growth across the world, progressively expanding its offerings, from apparel and accessories to cosmetics and fragrances, as well as eyewear, watches, jewellery, furniture and furnishing accessories.

The solid values on which it has built its methods of operating, and its distinctive sensitivity to changes in society, leads the Group to look at the sustainability of its products and actions with increased attention, and to integrate this into its strategic choices.

With the aim of defining this path and involving the entire value chain in this process, the Group has specified five priority areas of action, taking into account the needs of its stakeholders, which are the pillars on which sustainability activities are based.

THE ARMANI GROUP

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3 Corporate Offices

4 Corporate Offices

THE ARMANI GROUPIN THE WORLD

AMERICAS

349 Company-owned stores

EUROPE

103 Company-owned stores

6 Production sites (Italy) 1 Production sites

ASIA PACIFIC

79 Company-owned stores

11 Corporate Offices

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ENVIRONMENTAL PROTECTION AND EFFICIENT USE OF RESOURCES

EMPLOYEE WELLBEING AND TALENT DEVELOPMENT

ATTENTION TO THE CUSTOMER

SUPPORT AND INVOLVEMENT OF COMMUNITIES

RESPONSIBLE MANAGEMENT OF THE SUPPLY CHAIN

THE PILLARS OF SUSTAINABILITY

To ensure that the principles of sustainability are effectively integrated with the strategies that steer the Group’s growth, priority aspects have been identified for the Group and its stakeholders.

As a result of this analysis, the 5 pillars at the heart of Armani Group’s sustainability policy have been identified.

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In order to ensure excellent service, in terms of quality, authenticity, safety and traceability of the product.

ATTENTION TO THE CUSTOMER

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To ensure that the management of the customer experience is optimal, at all times and in all places, the Group offers sales staff training courses conceived to ensure that those who will be called upon to provide a high-quality and increasingly personalised service are suitably prepared.

For the Armani Group, showing respect for its customers also involves a commitment to ensuring the authenticity of the products available for purchase. The increase in the workforce and a substantial degree of investment in new technologies have led to a boost in the efficiency of the way brand protection processes are managed.

This in turn has led to the introduction of the QR Code project, developed in collaboration with Certilogo and Avery Dennison.

PROTECTING THE BRAND

THE QR CODE PROJECT

Thanks to this tool, the customer can access the authentication process of the Group’s products, simply by scanning the QR code on the product labels.This technology, already in use for the products of the AX Armani Exchange and Emporio Armani lines, will be progressively extended to all the Group’s brands.

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Building stable business relationships and making the supply chain even more ethical from the point of view of environmental and social impacts, giving priority to involvement and dialogue with all suppliers.

RESPONSIBLE MANAGEMENT OF THE SUPPLY CHAIN

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The Armani Group’s efforts to reduce its environmental impact start with its own offices, and the stores and production sites under its direct control. Initiatives are concentrated on three key aspects:

• reduction of energy and water consumption;• waste sorting;• raising employee awareness of environmental sustainability issues.

Structural measures that have been carried out include the installation of photovoltaic systems, the implementation of remote systems to monitor company consumption, and the selection of materials used in renovating offices and shops with sustainability in mind. Particular attention is also paid to sustainable mobility, with the installation of electric charging stations for bicycles, scooters and cars, as well as an electric shuttle for internal transport between the offices in Milan.

RESPONSIBLE MANAGEMENT OF THE SITES

So as to effectively manage the various aspects that have an impact on the Armani Group’s sustainability, the entire supply chain must be examined. When selecting suppliers, the quality of the product being offered must be considered, but also the precise environmental, ethical and safety standards. For this reason, suppliers are required to sign three key documents:

• The Code of Environmental Conduct• The Social Code of Conduct• The Restricted Substances List (RSL)

Compliance with these standards is continually verified by means of social and environmental audits which are used to identify critical aspects, and to guide suppliers towards any corrective actions required in order for them to continue supplying to the Group.These audits also make it possible to build a lasting and transparent relationship with suppliers, encouraging best practices and a culture of sustainability.

A RESPONSIBLE SUPPLY CHAIN

AUDITS OF SUPPLIERS

2017 2018

220

147200

150

50

100

0

80%95%

1%5%

13%

AFRICA

ASIA PACIFIC

SUPPLIERSOF MARKETED

6%

AMERICASFAÇONIST SUPPLIERS

EUROPE

Number of social and environmental audits

Suppliers audited by category and geographical distribution

SOCIAL AUDITS verify compliance with regulations regarding health and safety at work, workers’ rights, working hours, and minimum wages.

ENVIRONMENTAL AUDITS verify compliance with current regulations and company standards on the use of chemicals in products and production processes.

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The Armani Group has made a commitment to progressively reduce, by 2020, all chemical substances that are considered potentially dangerous, to the point of eliminating them from production processes (or reducing to levels well below the legal limits).In this process, strong relationships with suppliers are fundamental as these encourage the search for alternative materials that can achieve the same high quality whilst ensuring lower environmental impacts.

Three main phases of the Zero Discharge objective can be identified:

• regular updating of the Restricted Substances List (RSL);

• execution of laboratory tests on significant samples from the different collections;

• analysis of test results to develop case studies on particular substances, so as to provide guidance for all stakeholders involved.

PRODUCT SAFETY

The Restricted Substances List (RSL) is the reference document that specifies all chemicals that may not be used, as well as the usage limits of those which are permitted. For some of these substances, the limits have been defined taking into account the most restrictive laws worldwide. For the others, even stricter limits have been set in order to further encourage the search for alternatives. The RSLs are specific to each product category and were created thanks to the collaboration between the Armani Group and the stakeholders involved in the production process, especially suppliers and chemical laboratories.

Laboratory tests, carried out on a sample basis every season by certified chemical laboratories, are the fundamental tool for ensuring compliance with the RSLs and steps towards the Zero Discharge objective. The results are used to continuously update the RSLs.

In 2018, more than 10,000 chemical tests were carried out to ensure that products were completely safe before they were placed on the market.

RESTRICTED SUBSTANCES LIST AND CHEMICAL TESTS

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Reducing environmental impact throughout the value chain.

ENVIRONMENTAL PROTECTION AND EFFICIENT USE OF RESOURCES

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COTTON MADE IN AFRICA

The Group’s collections contain pieces produced with cotton obtained from the Cotton Made in Africa project by the Aid By Trade Foundation. The cotton is grown with particular attention to its environmental impact, especially on waterways, resulting from the use of pesticides and fertilisers. In addition to this, the project contributes to improving the socio-economic conditions of local farmers by sharing know-how.

DENIM AND CHITOSAN

The Emporio Armani collections feature denim obtained through an innovative process based on the use of chitosan, a natural and biodegradable substance derived from the waste from processing crustaceans. This substance, already employed in agriculture and medicine, is used in fixing the colour as an alternative to the chemical substances normally used and with a reduction of the water and energy consumption.

CASHMERE FLAKE

The Group has created down jackets with an exclusive cashmere padding, producing warm, very light garments, and above all discovering a valid alternative to goose down.

FUR FREE POLICY

Since the Autumn Winter 2016/17 season, the Armani Group has discontinued use of all products made with animal fur from all its collections, following an agreement with the Fur Free Alliance.

Quality and transparency throughout the chain is also ensured by carefully selecting raw materials, taking into consideration the sustainability values identified by the Group, and making it possible to have a thorough understanding of the phases of the life cycle of products, right from their origins. In 2018 the collections were enriched with the use of innovative materials with reduced environmental impact.

THE SELECTION OF RAW MATERIALS

RECYCLED RAW MATERIALS

With the aim of combating wastage, reducing environmental impact and minimising industrial waste, the Group has stepped up its research into alternative raw materials from other sectors as well as recycled materials. Among the items that have been created are the uniforms of the Olimpia Milano basketball team, designed using a technical fabric obtained from recycled plastic bottles (r-PET).

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The packaging of Armani products has been redesigned, with innovative use of materials in mind. In 2018 the number of recycled raw materials increased, as did the percentage of totally recyclable packaging.

The principles underlying the guidelines used in designing the Group’s packaging are:

• a preference for recycled materials;• a reduction in the use of plastics;• the use of certified paper and cardboard (FSC);• the choice of 100% recyclable or reusable solutions.

PACKAGING

In 2018 a substantial process of streamlining of the warehouses was completed, which led to the storage being concentrated in a single site. In this way, the use of resources was made more efficient, improving the service offered to the end customer.

Moreover, so as to guarantee the highest levels of traceability, the Transport Management System project has become fully operational. Thanks to the adoption of new software by all the production sites, this new system allows all the transport phases to be traced, while possible improvements can be suggested.

The Group has also adopted a series of technological improvements and organisational solutions to reduce the environmental impact of the supply chain. Among the steps taken, the most significant are the use of packaging systems that reduce the use of plastic, the use of means fuelled with low impact fuels, and the transportation of products in reusable containers to reduce the consumption of packaging cartons.

LOGISTICS Giorgo Armani corporate packaging

Paper with 40% post-consumer waste

100% FSC-certified paper

Handles in 100% recyclable woven paper

Emporio Armani corporate packaging

100% recycled paper

Circular mesh handles entirely made of paper

100% recyclable

Made of 100% recycled PET

• Hangers in 100% recycled ABS• Shoes boxes with collapsable construction that takes up 80% less

space during transportation• Boxes for the underwear line in 30-40% recycled plastic

Take-away packaging for Emporio Armani Caffè is 99% compostable. Only mug cups are in recyclable plastic.

New handles made of 100% recycled polyester

FSC-certified paper with minimum of 50% post-consumer waste

100% recyclable

Made of 100% recycled PET

• Stickers made of paper and free of plastic coating• Ribbon in 100% recycled polyester

Paper used for the Giorgio Armani Privè line is produced with 80% less water consumption.

Armani Exchange corporate packaging

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The efforts that the Armani Group has undertaken over the years to make its supply chain more and more sustainable have led it to select precise characteristics that products must possess in order to meet the recognised sustainability standards.

In 2018 the Group decided to redefine its sustainability criteria by creating a protocol that represents a clear and shared basis on what a “sustainable product” means for the Armani Group.

The pilot project for creating such a protocol, which reflects the structure of the Group’s five pillars of sustainability, will terminate at the end of 2019, when it is published. The “Armani Sustainability Project” brand has been linked to the project, and thanks to this consumers can easily identify the best-performing products in terms of sustainability.

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To ensure the health, safety and protection of workers’ rights, by investing in training and the development of employees’ skills, the Group’s main

strategic asset.

EMPLOYEE WELLBEING AND TALENT DEVELOPMENT

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Aware of the fundamental role of its workforce in maintaining a leadership position in the world of fashion, the Armani Group pays particular attention to the wellbeing and personal and professional growth of its employees. A great deal of tangible initiatives has been progressively implemented. These include various measures for personal wellbeing, such as work flexibility for a healthy work/life balance, agreements with businesses or health services to take advantage of preferential rates, and complimentary health monitoring programmes. As a further confirmation of the company’s focus on its employees, the launch of the Armani People Care Welfare Plan was announced at the end of 2018.

Employee training is of critical importance and is provided throughout the duration of employees’ working experience, via specific courses aimed at different positions and roles within the company, and on various topics: from introductory courses for new recruits, to health and safety courses for all staff, to the training of managers and those who supervise certain teams or resources.

ATTENTION TO WELLBEING AND GROWTH WITHIN THE GROUP

TRAINING HOURS BY TYPE

4%

18%

28%

HEALTH AND SAFETY

CODE OF ETHICS

LINGUISTICTRAINING

10%

33%

7%

OTHER

TRAINING FOR MANAGERS

PROFESSIONAL TRAINING

over 4,600 employees involved in training activities

51,951 hours of training provided in 2018

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Creating value for the benefit of the territory and the people who live there.

SUPPORT AND INVOLVEMENT OF COMMUNITIES

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Among the key aspects that characterise the Armani brand identity is its link with the territory and the communities with which it comes into contact.

The Group’s activity is not limited to Milan, even if this is where it is most evident, but extends nationally and internationally, into areas ranging from culture to scientific research, to the fight against poverty.

THE COMMUNITIES WE SUPPORT

ACQUA FOR LIFEAcqua for Life is a campaign in partnership with L’Oréal, Green Cross International and Water Aid that helps provide the most deprived communities around the world with access to safe, clean water.

OLIMPIA MILANOAmong the Group’s non-profit activities are also those managed by Olimpia Milano Basketball, which conveys important values through sport, and offers children and young people in the most challenging areas of Milan valid opportunities for socialisation and learning.

OPERA SAN FRANCESCOThe Group promotes the work of Opera San Francesco, which for years has been operating in the Milan area to offer support to people in disadvantaged conditions.

FONDAZIONE UMBERTO VERONESI and AIRCSubstantial support is given to the Veronesi Foundation, which specialises in cancer diseases, as well as to the international campaigns of the Pink Ribbon that are promoted in Italy by the AIRC, the Italian Association for Cancer Research.

ABIOIn 2018 the Armani Group supported ABIO, the Association of Children in Hospital, which supports children and their families during periods of hospitalisation.

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FAI – The National Trust for ItalyThe Armani Group is a historical partner of FAI. It is one of the major donors, “I 200 del FAI”, whose contribution supports the enhancement of Italy’s artistic heritage.

ARMANI/SILOSSince 2015, the Group’s creative heritage, preserved and displayed at Armani/Silos, has been made available to the city of Milan so as to stimulate research and new ideas in the field of fashion and design.

Paper from responsibly managed forests, biodegradable and recyclable, made from pure cellulose with at least 25% recovered fibre and manufactured according to sustainability criteria during processing.

2019

www.armani.com