The Piaggio Group’s risk model identifies CSR risks implicit in internal risks.

The Piaggio Group started an Enterprise Risk Management (ERM) project to define and implement a structured, integrated system to identify, measure and manage company risks in line with applicable best practices. As part of the 2017 Risk Assessment campaign involving company managers across the Group, 129 risk scenarios were identified, comprising 26 categories which were grouped into 4 level-one macro-categories (External, Operational, Financial and Strategic Risks). In this context, issues concerning environmental and social aspects, human resources, human rights and the fight against corruption were all analysed, as detailed below. At the end of 2018, a campaign was launched to update the risk assessment analysis; this will involve newly-appointed company managers.

Environment

The analysis refers to the actual and potential effects of the Group’s operations on the environment, considering, for example, atmospheric emissions, waste management practices, the use and conservation of natural resources, etc.
Greenhouse gases (mainly CO2) and Volatile Organic Compounds (VOCs) released by solvents used in painting are some of the most hazardous substances for air pollution generated by automotive operators. The structural operations implemented in past years at the Group’s production plants have led to reductions in polluting emissions at some of these, while at others, levels of these emissions have remained stable.
Although the structure of the Company’s production sites has been designed to run on fossil fuels, Piaggio is engaged in optimising the management of existing sites to cut consumption.
Operations to clean up sites were necessary due to historical site contamination: the pollutants removed had not been used for several decades by the sites, proving the historical nature of this contamination. Other cases of ground contamination (spills or other significant pollution episodes) have never concerned Group operations.
Piaggio has ISO 14001 environmental certification and invests each year to reduce the environmental impact of its production sites.
Despite a considerable risk level, in line with other industry operators, control measures adopted significantly reduce environmental risks.

Employees

Risks concerning personnel include all aspects of an inadequate management of the Group’s human resources, including career paths, remuneration and training, diversity (age, gender, sexual orientation, disability, religious beliefs, ethnic background, etc.) as well as risks relative to occupational health and safety and industrial relations.
Piaggio operates globally with employees in Europe, the Americas and Asia. It promotes diversity of gender, age, nationality, ethnic background, ideology and religious beliefs, as it endorses different ways of pursuing and achieving maximum performance within a single and broad-ranging Group organisational framework. The integration of disabled people into the workforce is also made possible in practice by the accessibility of company facilities and the existence of a relative company procedure.
Piaggio adopts a system of recruitment, development and salary packages for personnel which recognises and rewards merit and performance. Development tools are used to build on and continually improve skills, while empowering potential, recognising and rewarding outstanding performance. Reward policies are designed to reward individuals and recognise their contribution to the company, according to the criteria of competitiveness, fairness and meritocracy. The above mechanisms reduce potential risks related to these aspects to a residual level which is not significant.
The Piaggio Group acknowledges the role of trade union organisations and worker representatives and is committed to establishing relationships with them that are characterised by attention, dialogue and a common understanding; in fact, assessment and continual engagement are considered essential for identifying the best solutions for the company’s specific needs. For these reasons and despite the high number of employees with trade union membership, strikes are infrequent.
As regards occupational health and safety, testing motorcycles with a medium and large engine capacity entails the highest risk levels. Generally, the risk of accidents/injuries to personnel is mitigated by adapting processes, adopting procedures and structures aligned with applicable occupational safety laws and international best standards, and promoting safe behaviour, through targeted training.

Social sphere

The social sphere includes aspects concerning Piaggio’s relations with consumers, as well as the effects of the business on the community.
In the first case, product quality and reliability are essential and key to obtaining and guaranteeing customer satisfaction and safety. In the “Product – Operational Risk” category, risk scenarios relating to potential product defects have been mapped. To mitigate these risks, Piaggio has established a Quality Control system. It tests products during various stages of the production process and carefully sources its suppliers based on technical/professional standards. The Group is also committed to achieving and maintaining certification for its quality management systems at a global level (ISO 9001 or ISO/TS 6949).

Human rights

As set out in the Code of Ethics, adopted in 2004, Piaggio specifically prohibits any form of discrimination or forced labour. This Code has been distributed to all subsidiaries and clearly states the principles and values the entire organisation takes inspiration from.
Based on the significant and specific nature of the Indian market, the following have been adopted: the Code of Business Conduct & Ethics and Whistle Blower Policy in 2016; the latter is designed to protect people reporting infringements of the Code, and therefore to guarantee the Code’s validity; a Policy on the Prevention of Sexual Harassment of women at the workplace.
Based on prevention and control mechanisms established in the Code of Ethics and adopted by all Group subsidiaries, no risk scenarios relative to the violation of human rights were identified.

Fighting against corruption

The fight against both active and passive corruption comes under the risk categories “Internal/external offences” of the Group’s risk model. In its Code of Ethics, Piaggio strictly prohibits any practice of corruption, request for and/or provision of preferential treatment, of any collusive behaviour, solicitation, whether direct/indirect and/or through third parties, of personal benefits of any kind for oneself and/or for others, of material benefits and/or any other advantage of any extent in favour of third parties.
A number of processes, procedures, roles and responsibilities have been defined to achieve the above objective, as regards business negotiations/relations with the public administration sector and with private entities.
The controls briefly described above decrease residual risk relative to episodes of active/passive corruption to a negligible level.

For a more detailed analysis of all the risks identified by the Piaggio Group, refer to the Report on Operations in the 2018 Consolidated Financial Statements.

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