SUSTAINABILITY REPORT 2020

NON-FINANCIAL STATEMENT 2020 IN ACCORDANCE WITH ITALIAN LEGISLATIVE DECREE 254/2016

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LETTER TO STAKEHOLDERS
THE CORPORATE IDENTITY AND GROUP PROFILE	5
MAIN TYPES OF RISK	14
MATERIALITY ANALYSIS AND STAKEHOLDER ENGAGEMENT	17
MANAGEMENT OF ENVIRONMENTAL MATTERS	22
Risks and opportunities	22
The policies applied by the CEMBRE Group	23
Non-financial performance	25
MANAGEMENT OF SOCIAL AND STAFF-RELATED MATTERS	32
Risks and opportunities	32
The policies applied by the CEMBRE Group	33
Product labelling	43
HEALTH AND SAFETY MANAGEMENT	44
Risks and opportunities	44
The policies applied by the CEMBRE Group	45
Non-financial performance	46
MANAGEMENT OF THE FIGHT AGAINST CORRUPTION	40
Risks and opportunities	49
The policies applied by the CEMBRE Group	49
Non-financial performance	51
SUPPLY CHAIN MANAGEMENT	52
Risks and opportunities	52
The policies applied by the CEMBRE Group	52
Non-financial performance	54
MANAGEMENT OF LEGAL AND FISCAL MATTERS	55
Risks and opportunities	55
The policies applied by the CEMBRE Group	55
Non-financial performance	56
METHODOLOGICAL NOTE	57

Letter to Stakeholders

Dear Stakeholders,

As Chairman and CEO of Cembre Spa, I am pleased to present to you our 2020 Consolidated Non-Financial Declaration, a document through which the Company reports on its commitment to social responsibility and sustainability.

Since its inception, Cembre has operated with passion and determination according to deeply-rooted values and principles while respecting the environment and people.

The Group has always paid great attention to constant dialogue with its stakeholders and the environment in which it operates on the issues deemed most relevant in sustainability.

Cembre's success, in over 50 years of activity, has been made possible thanks to the constant contribution of its stakeholders, who have cooperated constructively in the development of new ideas, projects, and increasingly innovative products.

Cembre intends to strengthen and consolidate over time its collaboration with its stakeholders because we believe that this will lead us to increasingly important and challenging objectives.

The company's activities are inspired by the ethical principles of legality, honesty, transparency, impartiality, and respect, which are at the foundation of the company's culture and reaffirmed with conviction in the Group's Code of Ethics.

Our culture is geared towards technological innovation, product quality, and reliability, with a flexible structure able to anticipate market developments and beffer interpret new needs.

Technological acceleration, climate change, and awareness of human resources' importance are among the main elements characterising the change taking place in our society.

We are living through a transition made even more complex and dramatic by the recent spread of the coronavirus (Covid-19) pandemic that is affecting the entire world.

In response to this emergency, we have acted promptly and decisively in all geographical areas of our Group to minimise our employees' infection risk and, at the same time, ensure the continuity of supply of our products in all Cembre's countries of operation.

The current materiality matrix, valid for the three years 2020-2022, expresses the commitment of the Cembre Group to consciously reduce the negative impact that all of the Company's activities may have on the environment and society, enhancing instead all the positive aspects that a company may guarantee to the social fabric in which it is rooted.

In 2020, Cembre also confirmed its commitment to developing several projects and initiatives supporting local communities in priority areas, such as respect for the

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environment, promotion and protection of the most disadvantaged, development of education and training, art, culture, and sports.

Cembre chose to appoint a Sustainability Manager to improve its ability to manage the broad issue of sustainability and to spread the culture of social, environmental, and economic responsibility in all the Group's locations.

Cembre intends to make sustainability one of the critical elements of its action to face new challenges successfully and create, together with our stakeholders, its new business model capable of focusing on innovation and circularity, developing a virtuous synergy between values, economy, and productive development, convinced that this is the way to create new and vital opportunities for growth.

The corporate identity and Group profile

Founded in 1969 in Brescia, CEMBRE is a European leader in the manufacture of compression connectors and related installation tools with a ten-year history of successes and growth.

1969 CEMBRE (acronym for Costruzioni Elettro-Meccaniche BREsciane [Electro-MechanicalConstructions of Brescia]) is founded in Brescia.
1977 Production is moved to the current office in via Serenissima, Brescia
1986 CEMBRE Ltd. is established in Coleshill, Birmingham, UK.
1988 CEMBRE S.a.r.l. is established in Bagneaux, Paris.
1990 The CEMBRE S.p.A Quality Management System is certified by LRQA according to ISO 9000:2008 standard.
1994 Establishment of CEMBRE España SL in Madrid, Spain.
1995 Establishment of CEMBRE AS in Stokke, Norway.
1997 CEMBRE GmbH is established in Munich, Germany. CEMBRE S.p.A. is listed on the Milan Stock Exchange.
1999 OELMA s.r.l. is purchased, a company specialised in the production of cable glands and electrical materials in general. CEMBRE Inc. is established in Edison, New Jersey, USA.
2001 CEMBRE S.p.A. enters the STAR segment of the Italian Stock Exchange MTA.
2002 Establishment of General Marking s.r.l. and acquisition of a company specialised in the production of row markers and electrical components.
2008 Certification of the CEMBRE S.p.A. Environmental Management System in accordance with ISO 14001:2004 standard.
2011 Acquisition of 13,500 sqm of warehouses adjacent to the Brescia office.
2012 Certification of the CEMBRE S.p.A. Occupational Health and Safety Management System and its Italian regional offices, in accordance with OHSAS 18001:2007 standard. Merger by acquisition of General Marking s.r.l. into CEMBRE S.p.A.
2016 Closure of CEMBRE AS.
2017 Certification of the CEMBRE Ltd Environmental Management System also in accordance with ISO 14001:2015 standard.
2018 CEMBRE GmbH acquires IKUMA GmH & Co. KG, a company specialised in marketing electrical materials, and IKUMA Verwaltungs GmbH, a non-operating company that carries out administration and management activities for IKUMA KG. Both companies have registered office in Weinstadt, near Stuttgart.
2020 Merger of IKUMA into CEMBRE GmbH.

In order to achieve this objective, CEMBRE S.p.A. hinges its work on the following principles:

· continuous increase of efficiency and effectiveness in process management;
· research and innovation to improve existing products and offer innovative products that stay one step ahead of market demands and our competitors;
· expansion of commercial penetration;
· heightened accountability, involvement and participation of, and listening to, its collaborators;

Mission

CEMBRE collaborates with its product users to develop the best possible technical and economic solutions in the field of electrical connections.

· environmental protection through the reduction of the environmental impact, energy consumption, and the production of pollutants, as well as the promotion of biodiversity;
safeguarding the health and safety of all staff working in CEMBRE and all those using our products through an analysis and systematic reduction of risks;
· continuous improvement of its Company Management System;
· compliance with relevant or subscribed provisions, whether from laws, national or international regulations or arranged by the parties themselves;
· respect and optimisation of the values set out in the Corporate Code of Conduct.

"The wealth of the range of products, the widespread nature and effectiveness of the sales network and the constant focus on customer needs, are further strengths boasted by the CEMBRE Group insofar as they are able to guarantee a significant commercial benefit in a global market that is evolving constantly. "

The CEMBRE Group Management team has set itself the aim of structuring the Company in a modern manner within the European and international market and supplying all corporate levels with the general rules and procedures necessary to guarantee the maintenance and improvement of product quality, the safeguarding of the environment and health and safety at work.

The Corporate Policy, prepared by the Management, sets out the aims and general guidelines to be pursued in maintaining and improving the Company Management System; these aims can be achieved through:

· the use of suitable resources:
· the dissemination within and, where envisaged, outside the CEMBRE Group, of the Corporate Policy, aims, indicators and targets envisaged;
· training of all staff on the Company Management System;
· the sensitisation of all collaborators towards the importance of satisfying both internal and external stakeholders' needs;
· compliance with laws, regulations, provisions and procedures;
· the regular review of the Company Management System.

The Corporate Policy, indicators and targets of the CEMBRE Group ensue from a careful, objective analysis of the internal situation, the results achieved and possible future developments, as well as of the external environment, customer demands and those made by other stakeholders.

The Company Management System, which is standardised following the provisions of standards ISO 9001:2015, ISO 14001:2015, and standard BS OHSAS 18001:2007 (in April 2021, the transition from the current OHSAS 18001 to ISO 45001 standard will take place), is the tool used to translate the principles of the Corporate Policy into goals and monitor their achievement.

The Group Management, the directors of the subsidiaries and all managers of the various company areas are involved in encouraging staff to participate more and ensuring the continuous improvement of the effectiveness and efficiency of processes, in order to satisfy the established objectives.

All activities carried out by the CEMBRE Group are focussed on ensuring both internal and external customer satisfaction; this is constantly monitored, not only on the basis of the analysis of the complaints received, but through the documented monitoring of the activities carried out and the regular measurement of the quality of the services offered.

The documentation collected is reviewed by the Managers in collaboration with the Company Management System Manager and the departments involved in the activities.

Group Structure

In 2020, following the merger of IKUMA into CEMBRE GmbH, the number of companies in the CEMBRE Group was reduced from 7 to 6 units. The parent company CEMBRE S.p.A., based in Brescia, is the largest production unit and directly owns 100% of all other Group companies.

In addition to serving its Italian and foreign customers, the parent company also supplies products that are marketed by the foreign subsidiaries in the respective national markets.

The Group's second-largest manufacturing unit is based in Sutton Coldfield near Birmingham in the United Kingdom and is mainly dedicated to the British market, while the other four companies are purely for distribution and are based in the vicinity of Paris (France), Madrid (Spain), Munich (Germany) and Edison (New Jersey, USA).

Following the merger of IKUMA into CEMBRE GmbH, the Stuttgart office is considered a regional office.

The direct presence in important countries of western Europe and the United States enables the Group to effectively reach the individual markets, increasing contact with the customer and assuring immediate, qualified, technical-commercial assistance.

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Group highlights

CEMBRE Group Governance

CEMBRE S.p.A. is organised according to a "traditional" administration and control model, with the presence of a Shareholders' Meeting, a Board of Directors and a Board of Statutory Auditors.

The CEMBRE corporate governance structure is based on the central role of the Board of Directors, as the body in charge of Company administration, which has chosen, from amongst its members, a Managing Director assigned full powers of Board management with the exception of those that cannot be delegated by law and the examination and approval of significant operations and related party transactions.

Within the Board, the Remuneration Committee, the Control and Risks Committee and the Related Party Transactions Committee, have been established. An independent auditing firm audits the Group's consolidated financial statements and the Parent Company's financial statements.

CEMBRE S.p.A. has been listed on the Telematic Stock Market (MTA) since 15 December 1997, and since 24 September 2001 in the STAR segment. The share capital is €8,840,000.00, subscribed and paid-in, divided up into 17,000,000 shares each with a face value of €0.52. As at the date of this report, the floating capital is 28.91%.

CEMBRE S.p.A. is controlled by Lysne S.p.A., a holding company based in Brescia.

Sustainability has always been viewed with great attention by CEMBRE; indeed, this is why the company has decided that it was best to keep the responsibility for these aspects with the Board of Directors.

The Group governance model is described within the "Report on Corporate Governance and Ownership Structures", prepared in accordance with the provisions of Art. 123-bis of the Consolidated Finance Act and published on the website www.cembre.com, to which reference is made for more details.

The sales network

In Italy, CEMBRE S.p.A. operates through a capillary distribution network, with its own offices and warehouses in Brescia, Turin, Milan, Padua, Bologna, Florence and Palermo; in the other regions, it operates through agents, organised for technical-commercial assistance and with warehouses for rapid deliveries.

CEMBRE is also present in the main countries across the globe, thanks to a network of representatives or correspondents, who can guarantee immediate, qualified technicalcommercial assistance and rapid deliveries of products from their warehouses.

As already described above, the growth in CEMBRE's business volumes and the consequent need to supply suitable support to foreign customers, over the years has led to the establishment of companies in the main European countries and in the United States of America.

The CEMBRE sales force worldwide numbers more than 100 functionaries dedicated to daily visits to customers.

Economic value generated and distributed and economic impact

In 2020, the economic value generated by the Group was EUR 137.1 million. The analysis given below shows the flow of resources sent to the various stakeholders, such as employees, suppliers of goods, services and capital and the Public Administration and general public, by means of external donations.

The table below shows the trend over the last three years, where the effect of the ongoing pandemic crisis is evident. The pandemic effects have severely affected the economic fabric, leading to a collapse in demand and a drop in investment. Although the Group experienced a reduction in its turnover, it could limit the crisis's effects, mainly thanks to the positive performance recorded in the fourth quarter of 2020.

As a result, the CEMBRE Group again recorded a positive financial result in FY 2020. For such reason, together with a solid capital base, is a guarantee for the company's continuity, even after exceptional events such as the one that has occurred in recent months.

Economic figures	2020	2019	2018
(thousands of euros)
Revenues from sales and services provided	€ 137.137	€ 146.296	€ 144,096
Other income and revenues, net of the use of provisions	€ 786	€ 979	€ 611
Losses on receivables	(€ 220)	(€ 53)	(€ 26)
Capitalised internal construction costs	€ 1,207	€ 1,055	€ 958
Write-down of receivables	(€ 94)	(€ 28)	(€ 89)
Financial income	€ 7	€ 7	€ 8
Foreign exchange gains (losses)	(€ 171)	(€ 81)	(€ 82)
ECONOMIC VALUE GENERATED (A)	€ 138,652	€ 148,175	€ 145,476
Distributed to employees	€ 41,461	€ 41,693	€ 39,989
Distributed to suppliers	€ 60,916	€ 69,448	€ 70,120
Distributed to lenders	€ 134	€ 170	€ 57
Distributed to shareholders'	€ 15,068	€ 15,048	€ 15,048
Distributed to the public administration	€ 5,927	€ 5,247	€ 5,630
External donations	€ 106	€ 35	€ 31
ECONOMIC VALUE DISTRIBUTED (B)	€ 123,612	€ 131,641	€ 130,875
ECONOMIC VALUE WITHHELD BY THE GROUP	€ 15,040	€ 16,534	€ 14,601
Amortisation, depreciation, provisions and other impairment	€ 11,133	€ 9,892	€ 6,914
Self-financing	€ 3,907	€ 6,642	€ 7,687
ECONOMIC VALUE WITHHELD BY THE GROUP	€ 15,040	€ 16,534	€ 14,601

¹ For each year of reporting, the value of the dividends proposed for approval at the Shareholders' Meeting is assigned to the value distributed to shareholders (not recorded as liability at 31 December).

Main types of risk

CEMBRE carries out a risk assessment every two years to update its risk map and define actions to be implemented to contain risks and identify opportunities for improvement.

The analysis takes into account the assessment of the risk perceived by the company's main stakeholders.

The mapping of these risks is in line with the approach to identify the main corporate risks (financial, strategic, governance, operational, digital, and compliance), which are continuously monitored through the company's internal auditing process.

In particular, the main risks identified are the following.

Environmental dimension:

environmental risks: the most restrictive environmental protection regulations require companies to take specific actions to minimise their environmental impact and safeguard biodiversity.

climate risks: material damage resulting from climate change could cause damage to assets and infrastructures, with the possibility of prolonged unavailability of these assets. This will be analysed in the next risk assessment due at the end of 2021.

Social dimension:

human capital risks: in a context of continuous change and evolution of technology and the labor market, new profiles with high professional skills become essential for companies that are managing the transition and have a wide geographical presence.

Organisations need to move towards new agile and flexible business models and diversity policies.

occupational health and safety risks: these risks are related to the performance of operational activities at the Group's units.

CEMBRE intends to limit and eliminate risks to workers' health and safety as much as possible by analysing the risks of company processes and identifying any hazardous situations. Under the Risk Assessment Document and to prevent or at least mitigate the risks identified, CEMBRE implements the required actions by modifying technological processes, adopting highly automated solutions, using Personal Protective Equipment (PPE), and promoting specific training opportunities.

local community-based risk: the presence in such a vast geographical area necessarily implies a comparison with different realities and a thorough knowledge of the territory and several stakeholders' needs.

Business and governance dimension:

business continuity risks: a partial or total interruption of operational and/or commercial activities could expose Cembre to risks of sanctions, losses, and reputational damage.

cyber attacks-related risks: the era of digitisation and technological innovation means that organisations are increasingly exposed to cyber attacks, which are becoming more numerous and sophisticated

The risk of intrusion into the corporate network is controlled by using a redundant firewall system and the setting of periodically expiring usernames and passwords to access the network.

Also, a data encryption system has been implemented on all portable devices.

digitization, IT effectiveness, and service continuity related risks: Cembre's IT structure is constantly being adapted to guarantee its constant correspondence to the company's needs and improve its ability to support new applications.

The availability of the systems is guaranteed even in the event of a power failure by redundant uninterruptible power supplies supported by several gensets set up to operate automatically.

The availability of adequately stored backup copies is a guarantee against the loss of information. Access to the connectivity and server distribution rooms is only allowed to specialised staff and is controlled by badge readers.

Specialised external companies carry out periodic security audits of systems and privileged users.

protection of personal data related risks: the Group's growth at a global level in terms of the number of customers and geographical areas implies a natural exposure to personal data protection risks. Also, the increasingly dense legislation on privacy, the nonimplementation of which may cause economic or financial losses and reputational damage.

> compliance risks:

CEMBRE first adopted Model 231 in 2008 and since then has ensured that the Model is correctly applied by periodically testing the protocols.

The Company continuously monitors regulatory developments, evaluating possible impacts/opportunities on the business. CEMBRE is aware that any violations of laws and regulations could expose it to the risk of incurring judicial or administrative sanctions, economic or financial losses, and reputational damage.

Concerning tax legislation, it carries out all activities deemed necessary to ensure adequate supervision.

Materiality analysis and stakeholder engagement

The CEMBRE Group non-financial report is focused on the importance of the various aspects relative to its business.

CEMBRE felt it necessary to define better the main parties directly affected by the company's activities (stakeholders) when updating this declaration. Following this, the materiality matrix was updated, conducting a series of analyses to refine the engagement process according to the points of attention identified.

Since dialogue with the company's primary stakeholders is considered fundamental, a process has been launched to survey the various company departments responsible for day-to-day stakeholder relations. The outcome of this process has led to the identification of 7 main categories of stakeholder, with whom CEMBRE has already established an active and constant dialogue over the years, both individually (visits, dedicated events in the company) and collectively (publications on websites, social media, participation in and organisation of conferences) based on values of fransparency and trust.

These involvement activities are primarily of an informative and consultative nature, while CEMBRE intends to initiate, in the coming months, more appropriate ways of consolidating an ongoing and mutually beneficial dialogue with the several stakeholders.

STAKFHOI D

The table below summarises the listening and engagement tools and expectations of all CEMBRE's stakeholders to whom it is required to respond.

CEMBRE Stakeholder	Listening and engagement tools	Stakeholder expectations and interests towards CEMBRE
Investors	· Shareholders' Meeting · IR section of the website · At least twice a year, participation in conferences organised by Borsa Italiana other professional or operators dedicated to institutional investors and financial analysts. · Listening and support channels offered by the Investor Relations department. • Meetings and video calls with analysts and institutional investors on request. · Visits to the company's headquarters manufacturing and units by institutional investors and analysts organised periodically or on request.	· CEMBRE Group shareholder value growth • Reducing investment risks · Transparency on Corporate Governance structures, long-term strategy, objectives, management operations, business development, and environmental and social performance.
Customers	· Daily activities and relations with business units · Institutional website and dedicated email accounts · Supplier evaluation questionnaires · Customer service channels · Support and training network for customer repair operators · Surveys of customer needs and expectations product tor new development · Events for costumers	· Product reliability and safety · Reliability and flexibility of manufacturing processes to ensure business continuity and adherence to delivery schedules. · Support for the joint development of customized solutions · Technical support to the network of repair professionals and assistance in know-how 18 transfer. · Continuous product innovation, also concerning improving environmental performance and care for product design.
Industry companies and competitors	· Participation in market-specific events and round tables. · Participation in work and thematic committees of trade associations.	· Protection of free competition
Employees	· Daily activities and reports of the Human Resources and Organisation Department. · Channels for collecting reports of violations of the Code of Ethics. · Internal communication activities (e- mail and notice boards). • Training on organisational behaviour. · Annual personal and corporate performance assessment interviews.	• Safe working environment, where people's health and psychophysical well- being are protected. · Employment stability. · Opportunities personal tor and professional growth. · Training and skills development pathways. · Remuneration policies and merit-based incentive systems. • Inclusion and enhancement of diversity. involvement · Transparency and regarding the company's objectives and performance.
Suppliers	· Qualification and evaluation process. · Daily activities and reports of the Procurement Department.	· Timely and correct compliance with contract terms. · Supply continuity requests. · Possibility of developing strategic partnerships for the improvement of its activities.

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Local communities	· Orientation and involvement of high school and university students and related recruitment programmes. · Discussion and dialogue tables with the Public Administration. · Initiatives to support the social and cultural development of the territories promoted by the Group. · Media monitoring (press, web, social networks). · Donation of technological equipment to schools.	• Support to the school world, also through the availability to host students in school- work training schemes. · Collaboration with universities and research centres in the development and dissemination of engineering and technical-scientific knowledge and skills. · Provide job opportunities and protect employment in the Group and the related industries. · Development of manufacturing and logistics processes that safeguard the environment and the health of people living in the vicinity of CEMBRE's production units and the Group's suppliers. · CEMBRE's participation in and support for development cultural and social inclusion projects.
Institutions	· Attention to awareness-raising campaigns environmental by associations and analyses by the scientific community.	· Ensure full compliance and adherence to applicable regulations. · Control of the supply chain to manage social and environmental risks throughout the value chain. · Combat · air pollution and global warming. · Conservation of natural resources and circularity of the economy. · Protection of ecosystems and natural biodiversity. · Contribution to the achievement of the UN Sustainable Development Goals.

Therefore, the materiality analysis was updated according to the principles of the GRI (Global Reporting Initiative) sustainability reporting guidelines, aimed at identifying the matters that could considerably affect the Group's capacity to create value in the short-, medium- and long-term, and which are most relevant to the Group and its stakeholders.

The sustainability manager carried out the analysis process with the involvement of fop management and all the departments concerned with the various issues.

The matters identified as material are worthy of dedicated reporting as they can influence stakeholders' decisions and reflect the Group's social, environmental and economic impact.

The materiality analysis process was structured as follows:

Identification of material topics

· Research and analysis of internal sources (policies, procedures, etc.) and external sources (analysis of publications of standard setters and benchmarking with the main competitors);
· Preparation of a long list of potentially material topics;
· Review and approval of the lona list and screening of those topics to create a short list.

Evaluation of material topics

· Organisation of meetings with front-line personnel to evaluate the importance of each topic on the short list, from the perspective of the Company as well as stakeholders:
· Consolidation of the results of evaluation the and preparation of the relative materiality matrix.

Validation and review

· Approval of the short list of topics identified and evaluated in the previous phases;
· Review and verification of the Materiality Matrix arising from the evaluation of the various topics:
· Overall of the approval analysis.

The results of the materiality analysis are summarised and represented graphically in the "materiality matrix" (see graph below); more specifically, this matrix is a graphical representation of the importance attributed to each matter from Management's viewpoint (x axis) and that of the stakeholders (y axis).

Therefore, the higher up on the right the matter within the graph, the more important it is for both parties. The material matters emerging during the analysis are the starting point from which the Company has focused its non-financial information report.

Compared to last year, the method for setting the materiality threshold has changed to use a more conservative approach, including, among material matters, those issues that are only relevant to the company or its stakeholders.

The threshold was defined by averaging the scores related to internal and external relevance.

As foreseen in the procedure approved by the Board of Directors in November 2020, the materiality analysis was updated three years after the first reporting (2017). The materiality analysis will still be subject to annual assessment for its validity before the next three-year update.

The matters of "Relations with personnel," even though they been considered as of reduced relevance for CEMBRE, will also be reported as it is expressly required by Italian Legislative Decree no. 254/2016.

Management of environmental matters

Risks and opportunities

In line with international models and best practices (COSO Integrated Framework), the CEMBRE internal control system is based on company procedures that are relevant to the prevention and monitoring of operational risks, such as, for example, the Environmental Management System UNI EN ISO 14001.

Environmental risks are analysed in view of the environmental impact assessment, which is reviewed at least once a year or at different frequencies if new production processes are installed. The Company's main environmental risks are connected with the purification of water of the galvanic chemical plant, the management of some hazardous waste and the consumption of oils and chemical products.

In short, the main risks to which CEMBRE is subject, are:

· risk of environmental pollution due to inadequacy or malfunction of the water purification and disposal plants or incorrect handling, use and storage of hazardous substances, oils and chemical products;
risk of non-conformity of plants due to obsolescence, wear and tear or ● legislative changes.

CEMBRE has protected itself against the risk of environmental pollution by means of a constant control of its plants and through their regular maintenance. The use, preservation and disposal of hazardous and chemical substances is assured by applying rigorous procedures that are updated from time to time. These substances are kept in dedicated areas, segregated with respect to the other materials needed for the production process. The staff involved in the management are specifically trained and instructed.

Plant conformity is guaranteed through the continuous update of the management system, frequent, scheduled emissions monitoring, including with the support of specialised consultancy firms. Moreover, the continuous renewal of the production lines prevents the risk of obsolescence and wear and tear of machinery.

CEMBRE S.p.A. is a manufacturing unit and is located on the eastern outskirts of the city of Brescia in an industrial hub, with close access to the ring-road and underground and covers a total area of 121,000 sqm.

The area in which CEMBRE S.p.A. is located falls entirely within class V (predominantly industrial area) and borders on areas that are also class V or IV (areas of intense human activity); it is not subject to landscape constraints but is partly affected by the buffer zone for public waterways (Vescovada and Municipal irrigation canals) and rests on gravelly and clayey soil.

CEMBRE Ltd is located east of Birmingham at Sutton Coldfield in the Midlands in the United Kingdom with close access to motorway networks.

The CEMBRE Ltd site is located within an industrial park, surrounded by agricultural land adjacent to the Birmingham Fazeley Canal.

Both CEMBRE S.p.A. and CEMBRE Ltd manufacturing units are located in areas where no IUCN Red List species are present. (GRI 304-1)

It is to be noted that the distribution companies of the Cembre Group are located entirely within urban areas, with a consequent negligible impact on biodiversity.

The policies applied by the CEMBRE Group

As seen from the CEMBRE materiality matrix, environmental matters are essential for the Group and are therefore included in its business practices.

As for all other matters, the Corporate Policy is established by the CEMBRE Group Management team and stems from a careful, objective analysis of multiple aspects, such as the analysis of the internal and external context, the results achieved, future objectives, and the demands of clients and relevant stakeholders.

The Corporate Policy is formalised by the CEMBRE Group Management team and subscribed by the CEMBRE S.p.A. Management team, within a document that is given out and presented to all Company staff; it is then disclosed to external stakeholders through publication on the website.

Following a careful assessment of the risks to the environment, associated with the activities carried out, indicators are chosen through which the level achieved can be quantified and verified, and any areas for improvement, identified.

In order to integrate this policy and attention paid to the environment in pursuing the Company's business, CEMBRE S.p.A. has implemented a Company Management System compliant with standard ISO 14001 for environmental management, tor which certification was obtained in 2008; this is updated on a regular basis to ensure that the Management System remains effective and improves continuously.

The same certification has also been extended to CEMBRE Ltd (UK), a company based in Great Britain and the second manufacturing unit of the CEMBRE Group. Legislative compliance is also assured through the verification and update of applicable laws and

regulations by means of a legislative verification programme, at least once a year, which is documented and disclosed to the company Management team. Verification of legislative compliance is audited both internally, by third party certifying entities.

The Company has envisaged different ways by which to monitor and manage environmental data:

once a month, consumption of energy, raw materials and water is monitored and compared with the hours of production and/or pieces produced, for each operative department, so as to obtain a series of clear, unique performance indicators. This data is highlighted by means of suitable graphs distributed to the Management and each Department Manager, so that it is disclosed to each individual operator;
. for the Italian plant, polluting emissions from flues and waste management are controlled annually, as required by the Environmental Management Department; more specifically, air-conditioning plants and the consumption of cryogenic gases are verified.
· waste water is controlled every day by the Department Manager and at least once a month by a qualified external company.

Customers' interest in environmental management in their supply chain is increasingly great. CEMBRE, in fact, receives various requests to fill in questionnaires connected with the management of environmental and social aspects and worker health and safety.

Over the various years, the company has undergone numerous customer audits, including run by Batenburg, DEKKRA, Rail for PRORAIL, DB, SNCF, etc., obtaining positive ratings.

Finally, in compliance with Italian Legislative Decree no. 102/2014 CEMBRE, in 2019, has carried out an energy diagnosis; consequently, various energy efficiency improvements have been planned and implemented, including: the installation and commissioning of a new geothermal plant, the construction of a new warehouse with photovoltaic panels, the adoption of "smart" control systems through which to reduce the incidence of air loss on the compressor network, used in the plant, and the analysis of residual consumption when the plant is not operating, collaboration with Sinergia Consulting to find how to reduce the incidence of air loss by the compressors used in the plant and reduce energy consumption when the plant is closed.

Intending to minimise the environmental impact, including indirect actions, Cembre, also this year, maintained an agreement with the Brescia Mobilità Group to guarantee its employees the possibility of using public transport when travelling to and from work and home, at special rates.

Non-financial performance

· Consumption by material type (GRI 301-1)

	UoM	2020	2019	2018
Ferrous material	kg	464,032	504.496	787.479
Non-ferrous material	kg	4,267,933	4.609.179	4.871.053
Plastic	kg	1,786,033	1,962,834	2,049,639
Total	kg	6,517,998	7,076,508	7,708,172

The significant constriction of the volumes of material consumption in the three categories (ferrous, non-ferrous, plastic) is linked to the blocking of the leading manufacturing activities for part of the first quarter of the year due to the lock-down imposed by the Covid-19 pandemic.

• Consumption of hazardous, oily and lubrication substances (GR) 301-1)

	UoM	2020	2019	2018
Chemical substances	kg	74,438	78.448	90.255
Oil + lubricants	kg	33,566	49.881	48.941
Total	kg	108,004	128.329	139.196

The reduction in oil, lubricant and chemical consumption between 2019 and 2020 is always connected to a total or partial shutdown for some manufacturing departments during the lock-down period in the first part of the year

• Consumption of packaging material (GRI 301-1)

	UoM	2020	2019	2018
Paper	kg	64,646	58,868	60,574
Wood	kg	158,250	210,572	203.968
Plastic	kg	11,494	12.691	22.181
lotal	kg	234,390	282,131	286,723

• Total energy consumption (GRI 302-1)

	UoM	2020	2019	2018
Electricity	MWh	9.341.74	9,440.26	9,557.75
of which self-produced and consumed by the photovoltaic plant	MWh	253.95	212.73
of which self-produced and sold by the photovoltaic plant	MWh	0.15	0.03
Energy from geothermal plant	MWh	1653.12	1653,12*
Diesel	MWh	2.787.74	3.424.29	3,356.67
Petrol	MWh	621.73	888.44	877.41
Natural Gas	MWh	4.439.83	4,090.63	4.288.66
Naphtha	MWh	246.1	125.55	111.62
lota	MWh	19,090.25	19622,29*	18,192.11

* the 2019 value has been modified following an update of the calculation method.

The following image shows the performance obtained in 2020 thanks to the panels installed at the Brescia unit.

This investment is a first step for CEMBRE towards a continuous reduction of its CO2 emissions.

The conversion factors used are as follows:

Source	Conversion factor
Diesel	11.91 MWh/t
Petrol	11.89 MWh/t
Naphtha	12.36 MWh/t
Natural Gas	0.009800277 MWh/m³

The natural gas conversion factor is calculated starting from:

the calorific power of natural gas, as obtained from the table of standard national parameters of coefficients used for the inventory of CO2 emissions in the national inventory UNFCCC (average values 2017-2019), equal to 0.035281 GJ/stdm³
· and the conversion factor from GJ to MWh, which in technical literature is 0.27778
Energy intensity (GRI 302-3) ●

	UoM	2020	2019	2018
Energy consumption	MWh	19.090.25	19622,29*	18.192.11
Consolidated turnover	€/000	137,137	146.296	144.096
Energy intensity		13.921	13,412*	12.625

*the 2019 value has been modified following an update of the calculation method.

Energy intensity is calculated as the ratio of total energy consumption, corresponding to the sum of direct consumption and indirect consumption, multiplied by one hundred and ine som of allect consomplion and indirect consomplion, information,
consolidated turnover in thousands of euros (Exergy consumption in Euro

Water collected by source*

	2020	2019	2018
From aqueducts	14.668.029	15.626.941	16.234.606
From wells	20.066.000	15.953.000	16.864.000
lotal	34.734.029	31.579.941	33.098.606
of which water withdrawn from water-stressed areas or sensitive locations	32.357.800	28,986,050	30,483,477

*The information for the American subsidiary, CEMBRE Inc., is not available. The increase in water consumption observed in 2020 compared to 2019 and 2018 is due to the inclusion, for Cembre S.p.A., of well withdrawals for irrigation use which in 2019 and 2018 amounted to about 3,000,000 litres.

From this year, Cembre S.p.A. reports information relating to water withdrawals according to the new GRI 303-3 (2018) indicator. Therefore, the value for water withdrawn in water-stressed areas is also reported. Based on information from the online

Aqueduct tool (https://www.wri.org/), the Brescia plant and the distribution companies in France and Spain fall within the water-stressed area ("high" or "Extremely high" range).

All the water taken is discharged, after treatment, into the drains upon completion of the work cycles; the water withheld for the manufacturing process is also released into the drains after purification.

Direct emissions (Scope 1)	UoM	2020	2019	2018
from Diesel	t CO2e	738.46	907.08	893.39
from Petrol	t CO2e	164.14	234.55	231.64
from Natural Gas	t CO2e	898.81	819.26	865.86
from Naphtha	t CO2e	64.9	33.13	29.46
from refrigerating gases	t CO2e	58.73	13.57	134.22
lotal	t Core	1.925.09	2.007.59	2.154.57

Direct (Scope 1) (GR) 302-1) and indirect emissions (Scope 2) (GRI 305-2)

Emissions from refrigerant gases in 2020 increased because of leaks due to faults at cooling plants.

Indirect emissions (Scope 2)	UoM	2020	2019	20113
Electricity - Location based	t CO2e	2.999.99	3.242.08	3.394.46
Electricity - Market based	t CO2e	4.114.38	4.404.82	4.482.45

The coefficients used to calculate direct emissions are taken from the national standard parameters table of coefficients used for the CO2 emissions inventory in the UNFCCC national inventory, obtained from ISPRA 2021 data:

	UoM	Coefficients
Diesel	t CO2e/t	3.155
Petrol	t CO2e/t	3.140
Natural Gas	t CO2e/dm³	1.984

The coefficient used to calculate Naphtha emissions in 2018, 2019 and 2020, shown in the national standard parameters table of coefficients used for the CO2 emissions inventory in the UNFCCC national inventory (average values for 2017-2019), equal to 73.3 t CO2e/TJ.

² ndustrial water (water from the well) at the Italian facility is treated on site according to defined procedures and, only after successful completion of the controls, discharged into the drains.

By contrast, for refrigerating gases, the following global heating potentials were used (GWP), whose source is the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC):

	UoM	GWP
Fgas - R410A	Kg CO2e/kg	1,924
Fgas - R404A	Kg CO2e/kg	3,943
Fgas - R407C	Kg CO2e/kg	1,624

The emissions value was obtained by applying the formula:

tCO2 e = (kg refrig. gas x GWP) / 1000

On the other hand, with respect to indirect emissions:

· for the location based emission factors relating to electricity procurement the source is Terna;
· for market-based emission factors relating to the supply of electricity, the source is the Association of Issuing Bodies (AIB) for European countries and the Center for Resource Solutions for the USA.

Country	UoM	Location Based	Market Based
Italy	t CO2e/MWh	0.336	0.466
United Kingdom	t CO2e/MWh	0.273	0.348
France	t CO2e/MWh	0.056	0.043
Spain	t CO2e/MWh	0.255	0.343
USA	t CO2e/MWh	0.399	0.324
Germany	t CO2e/MWh	0.449	0.609

• NOx and other significant emissions3 (GRI 305-7)

	2020	2019	2018
NOx	0.946	1.021	0.391
VOC	0.449	0.524	0.886
PM	0.075	0.048	0.139

The data refer only to CEMBRE S.p.A. For the UK subsidiary, CEMBRE Ltd., data has not been recorded, because not required by the local legislation, whilst the other

• the theoretical operating hours

³Data has been calculated, considering:

^· the concentration (expressed in mg/Nm³) of the element measured in the individual flues

^· the nominal capacity of each flue, expressed in Nm³/h

^· the days of operation of each flue

This allowed for the calculation of the annual tonnes of emissions of each element examined.

There are no SOx emissions. The calculation includes solely the emission points prescribed in the Single Environmental Authorisation, since identified as the most relevant by the local authority.

subsidiaries, which only carry out commercial activities, do not generate any significant emissions.

Nitrogen oxide values relate to the thermal plants, the negative trend in 2019-2020 is contextualised with the methods and measurement periods given that there are changes in value linked to the weather conditions during monitoring. Having said this, it should be stressed that all values recorded are fully in line with the limits prescribed by the Single Environmental Authorisation AUA 672/2019.

· Waste generated (GRI 306-2)

	UoM	2020	2019	2018
Hazardous	kg	360,413	331.590	344.550
Non-hazardous	kg	1.350.875	1.445.643	1.344.269
Total	kg	1,711,288	1,777,233	1,688,819

Concerning hazardous waste, the increase recorded in 2020, compared to 2019, was due to two significant deliveries: the first of 17,000 kg of saltwater from the washing machine in the cutting department and a second of 10,000 kg of galvanic mud from the tin plating department.

Waste for recycling

	UoM	2020	2019
Hazardous	kg	139.813	134.720
Non-hazardous	kg	1,191,102	1,290,045
Total	kg	1,330,915	1,424,765

Waste stored on site

	UoM	2020	2019
Hazardous	kg	500	4.060
Non-hazardous	kg	28,642	9.886
Total	kg	29,142	13,946

· Waste for landfill disposal

	UoM	2020	2019
Hazardous	kg	220,100	192.810
Non-hazardous	kg	11,754	2,780
lotal	kg	231,854	195,590

Waste sent for reuse

	UoM	2020	2019
Hazardous	kg
Non-hazardous	kg	870	2,500
Total	kg	870	2,500

· Waste sent for energy recovery

	UoM	2020	2019
Hazardous	kg
Non-hazardous	kg	5,110	9,170
rotal	kg	5,110	9,170

· Waste sent to incinerator

	UoM	2020	2019
Hazardous	kg
Non-hazardous	kg	108,582	114,283
Total	kg	108,582	114,283

• Waste other types of destination

	UoM	2020	2019
Hazardous	kg
Non-hazardous	kg	4,815	16,979
Total	kg	4,815	16,979

The data for 2018 are not shown in the table as, from 2019, a new method for collecting information on waste generated has been introduced, which provides greater detail regarding the disposal type adopted.

For 2018, the amount of waste generated was 1,688,819 (of which 344,550 was hazardous). Specifically, waste for recovery (recycling, reuse), disposal (landfill, energy recovery, incineration, other destination), and on-site storage amounted to 1,409,822 (of which 190,724 hazardous), 278,997 (of which 153,826 hazardous), and 3,660 (of which 2,500 hazardous), respectively.