Elica's Governance System and procedural division [...] corporate management is exercised by a Board of Directors (assisted by internal Board Committees: the Appointments and Remuneration Committee and the Control, Risks and Sustainability Committee); [...] The Company has also adopted specific Governance procedures which guide the operations of the corporate boards. These are assessed annually by top management, the internal Board committees and the Board of Directors, establishing which among them need updating. [...] Conflict of interest control policies [...] In addition to the statutory requirements, the Company adopts prevention and control policies in this regard, including through the implementation of the 231 Model and the Company's Ethics Code. The Company also encourages the development of a corporate culture that centres around the principles of transparency, ethics, fairness and the respect of applicable rules. The addressees of the 231 Model shall adopt appropriate behaviour to avoid conflicts of interests. Alongside the 231 Model, which is regularly updated, the Company has adopted a Related Party Transactions Policy, in addition to an Anti-Corruption Policy, which outline principles to prevent possible conflict of interests and resolve them where necessary. [...] The Related Party Transactions Policy (available on the Company's website Corporate Governance | Elica), in addition to the Mapping of Related Parties and transactions with the latter are assessed at least annually by the Control, Risks and Sustainability Committee and the Board of Directors. [...] Definition of the Group's Strategies, Objectives and Values: the actions of the Board of Directors [...] Based on the powers conferred, the Board of Directors: [...] monitors the exercise of delegated powers, the progress of strategic projects and business plans, the Group's growth and sustainable development strategies, including related risks and, on a semi-annual basis, the adequacy of the Internal Control and Risk Management System, the Governance and Compliance system and the significant transactions for the Group; [...] considers operations of the Company and its subsidiaries, when such operations have a significant strategic, economic, equity or financial importance for the Company or when the Executive Directors consider the involvement of the Board appropriate. [...] The Board of Directors, the Chief Executive Officer and members of the Control, Risks and Sustainability Committee, each in the exercise of their duties, are responsible for assessing and approving the Non-Financial Report as a whole, the letter to the stakeholders, and the results of the materiality analysis, having expertise in sustainability reporting. [...] Effectiveness of the Risk Management Model [...] Elica has adopted an Internal Control and Risk Management System ("ICRMS"). This system consists of a set of rules, procedures and organisational structures targeted at enabling the identification, measurement, management and monitoring of the main corporate risks. [...] The Internal Audit activities supplement, monitor and provide assurance on the ICRMS activities. This function is covered by an internal manager reporting directly to the Board of Directors; it is a key role for defining and assessing the internal control system and the risk prevention and management policy. [...] Integration of Risk Management and Sustainability [...] The Enterprise Risk Management Model applied by Elica includes integration with sustainability issues. Specifically, integration between Risk Management and Sustainability is particularly explicit in the following phases of the Risk Management process: [...] RISK IDENTIFICATION: in this phase, risks that may have implications for Environmental, Social and Corporate Governance (ESG), beginning with those contained in the Risk Universe, are identified; [...] RISK EVALUATION: in this phase, the possible impacts of risks are evaluated in relation to the individual ESG areas. In detail, Elica's Risk Management methodology includes specific impact assessment drivers targeted at intercepting the possible consequences of each risk on individual dimensions of ESG relevance. [...] Integration of Risk Management and 231 Model [...] Since Elica's 231 MCOM is structured by Business process and since the periodic Risk Assessment activities include a survey and evaluation of the main control safeguards, the two processes are conducted in an integrated manner, through synergistic work and constant dialogue between the corporate functions involved, and by providing for the consultation of external experts. [...] Shaping Elica's Sustainability [...] Following the issuance of the Corporate Governance Code for Listed Companies, Elica decided to adapt its sustainability governance model so that sustainable success is now a fundamental objective and stakeholders have a say in corporate decision making. [...] With the aim of maintaining a high level of Sustainability Governance and appropriately managing any possible impact arising from its activities and strategies, the Group has established its own managerial Sustainability Board reporting directly to the Chief Executive Officer. The Board is assigned with identifying possible sustainable development strategies and their integration to the business plan. The Board, which meets monthly, analyses the progress of actions in the Plan, monitors indicators associated with detailed actions and determines the need for new actions. Minutes are taken at the end of each meeting with decisions made and an indicative agenda for the following month's meeting. On a quarterly basis, the Board reports to the Control, Risks and Sustainability Committee and the Board of Directors on the status of actions under the Sustainability Plan and the performance achieved. In particular, the establishment of the Sustainability Board has enabled greater coordination among the functions involved in corporate activities related to sustainability, in addition to the structuring of the process of assessing and defining initiatives to be presented to the Control, Risks and Sustainability Committee and the Board of Directors. [...] Elica's current sustainability governance model is therefore structured as follows: • Board of Directors: approves the Consolidated Non-Financial Report annually; • Chief Executive Officer: evaluates and approves sustainability proposals; • Control, Risks and Sustainability Committee (CRSC): assists the Board of Directors in assessing and deciding on sustainability issues, with particular reference to the approval of the Non-Financial Report, stakeholder management activities and the Sustainability Plan; • Sustainability Board: comprising the main corporate and business functions, it meets periodically and assesses strategic and operational sustainability-related proposals. It also reviews and validates the draft Consolidated Non-Financial Report, defines stakeholder engagement strategies and assesses actions to support the macro-objectives in the sustainability plan, conducting a review of the plan's progress at the end of the fiscal year; • CFO and Sustainability Manager: calls the Sustainability Board, proposing additional new actions and any emerging priorities on ESG issues. [...] Combatting corruption [...] In order to prevent and contain events that may represent a risk for the commission of corruption offences, Elica has approved an Ethics Code contained in the 231 Organisational Model (in compliance with Legislative Decree No. 231 of June 8, 2001). [...] The Organisation and Management Model adopted by Elica is based on the following principles: [...] monitoring of corporate conduct and of documentation for every significant transaction; [...] adoption of a disciplinary system for sanctioning any failure to comply with the prescriptions and procedures of the Organisation and Management Model; [...] Compliance with the Ethics Code, which is based on the fundamental principles of legality, honesty, fairness, integrity, confidentiality and transparency, is critical for the prevention of corruption. [...] The subsidiaries EMC FIME S.r.l. and Air Force S.p.A. also have a 231 Model, which is scheduled to be updated in early 2023. [...] Generally, specific control standards are set with regard to the following categories of activities at risk of commission of acts of corruption: [...] relations with political and trade union organisations [...] In addition to the adoption of the dedicated Policy, various processes have been implemented to prevent and mitigate issues of corruption, including limitation of the use of cash, monitoring of the selection of suppliers and indirect purchases, even if not regulated by specific procedures, policies to regulate the receipt of gifts, benefits and invitations from third parties, and control of employee recruiting and rewarding, transfer pricing and sponsorship deals that Elica S.p.A. usually does not stipulate. [...] Lastly, the Whistleblower Protection Procedure forms part of the aforementioned prevention system: the employees of Elica S.p.A., EMC Fime S.r.l. and Air Force have several channels, including a dedicated e-mail address, to report any offence. In Poland and Italy, in addition to a dedicated e-mail address, a multi-purpose box has been made available for making suggestions to improve process and for reporting any irregularities, anonymously or otherwise. [...] Suppliers assessed according to environmental and social criteria [...] Similar to the supplier quality performance improvement process, Elica adopted a new audit process in 2022 to assess and minimise risks related to ethical, social, and environmental topics. Against this backdrop, in July 2022, Elica drafted and sent suppliers the "Elica Group Supplier Code of Conduct", requesting their formal compliance and signature. The Code was prepared and drafted by the QHSE Assurance, Legal Counsel and Risk Management functions and has been formally approved by Elica's CEO. The Group's Supplier Code of Conduct is expressly inspired by Elica's Ethics Code. It contains specific references to the protection of basic human rights, as envisaged by the principles of the ILO, and minimisation of the environmental impact of production activities. At the time of writing, about 17% of the Group's suppliers have signed the Code. [...] At the end of 2022, the Group performed its first two ESG audits (one in Poland and one in Italy), while no fewer than five audits are scheduled for 2023. Similarly to the Quality Capability audits, at the end of ESG audits, improvement plans are shared with suppliers to minimise any potential risks and encourage them to place greater emphasis on sustainability topics. Specifically, with regard to assessments on environmental and social topics, in Q4 2022, Elica asked 98 suppliers to fill out the "ESG Survey". At the time of writing, 47 suppliers have completed the survey, bringing the number of suppliers assessed using the new evaluation process adopted by Elica in 2021 to 118 (equal to approx. 44% of the Group's suppliers).