PIRELLI TYRE - 2009-2011 Management Plan

ADVANCING SUSTAINABILITY

FILIPPO BETTINI

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VALUE CHAIN INTEGRATION AND MANAGEMENT MODEL

2011 MAJOR ACHIEVEMENTS AND ACKNOWLEDGEMENTS

2012-2014 SUSTAINABILITY PLAN AND VISION TO 2015

AGENDA

PIRELLI 2015: A SUSTAINABLE COMPANY


Smart, efficient, profitable, innovation-driven.

Accountable and engaged to its stakeholders.

A premium company.

A sustainable company.

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AGENDA


TOTAL INTEGRATION OF SUSTAINABLE

MANAGEMENT IN THE VALUE CHAIN

Creating sustainable growth over time,

benefiting from tangible and intangible value return.

Economic

dimension

Environmental

Dimension

Social

Dimension

INTEGRATED MANAGEMENT

Finance, Administration & Control

Human Resources Management

Research & Development

Purchasing

Inbound/

outbound

logistics

Operation Marketing

& Sales

Post-sale

services

VALUE RETURN

From responsible

management of all

Stakeholders‟

expectations

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CHAIRMAN & CEO

SUSTAINABILITY

STEERING COMMITTEE

SUSTAINABILITY EQUAL OPPORTUNITIES

COUNTRY SUSTAINABILITY & EQUAL OPPORTUNITIES MANAGERS

STRONG COMPANY COMMITMENT

Co

ntin

uo

us im

prove

me

nt

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AGENDA


R&D investmens: steady 3% of sales

Green Performance revenues on total revenues 36,7%

2011 Group accident frequency rate -37% vs 2009

Third party SA8000 audits (LatAm, China, Egypt, Turkey, Romania + 58 suppliers)

Leadership model – Training for approx. 500 middle managers

Group-wide Campaign Week on Health, Safety and Environment

Average man days training per employee: 6,2

Process eco-efficiencies:

2011 energy specific consumption -8% vs 2009

2011 water specific withdrawal -28% vs 2009

2011 CO2 specific emissions -8% vs 2009

Issuance of all ISO 14001** certificates with additional SAS*** accreditation

Green Performance new products: Cinturato P1 (Car segment), W01 and G01

(Truck segment)

Environmental

Economic

& Governance

2011 MAJOR ACHIEVEMENTS*

Social

* Performance based on latest estimates

** ISO Standard for Environmental Management System

*** Swiss Accreditation Service

**** Occupational Health & Safety Management System

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2011 World Finance Award for the Italian Company with the best Corporate Governance

Best Supplier Latin America (Toyota)

Top brand in Brazil for the ninth consecutive year

Pzero wins Auto Zeitung test

31st place at 2011 Global RepTrakTM100

DJ Sustainability Index global leadership in the Auto

Parts and Tyre Industry for the 5th consecutive year:

Pirelli rating 2011-12: 91 vs. sector average 53

FTSE4Good rating 2012: 99/100

Presence in major financial sustainability indices

2011 MAJOR ACKNOWLEDGEMENTS

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AGENDA


Focus on premium products

Product and raw material innovation

Process innovation

Quality management and customer

service new metrics

HR management: Group-wide high quality workplaces

Strengthen Pirelli‟s role as global sustainability player

Russia: a sustainable integration

Push innovation in Green Performance

Rationalize Green-driven costs

Optimize resources, reduce emissions, push recycling/conversion

End-user engagement and public awareness

International growth:

Leadership consolidation in LatAm

Development in China and NAFTA

Entry into CIS – Russian markets

Integrating, supporting and protecting

Group targets and values


SUSTAINABILITY PLAN

2012-14 – Vision 2015 INDUSTRIAL PLAN

2012-14 - Vision 2015

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2012-2014 KEY PROJECTS

We advance sustainability by further...

Developing our Green Performance tyres

Investing in responsible processes

for our people

Investing in responsible processes

for the planet

Taking our Sustainability Model

beyond our boundaries

Exporting Responsibility

through the value chain

Engaging end-users

and investing in communities

Valuing our people

“Safe for people” & “Safe for the planet”

Occupational Health and Safety

“Carbon management” & “Water management”

New industrial realities

New Suppliers management web portal

Making road safety culture mainstream

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Merit & Ethics, Diversity, leadership development,

Dialogue, Rules, Training & Education

Investing in communities development

The already outstanding wet, dry and noise performance will be further increased

Excellence in wet and dry grip: more safety

SAFE FOR PEOPLE

DEVELOPING GREEN PERFORMANCE TYRES

Seal Inside (S.I.) a new technology covering almost 85% of the

possible accidental causes of air pressure losses**.

Cutting edge technology already on original equipment market

Self-sealing Cinturato P7: less accident

Green Performance safety features will be extended to Consumer markets in China, LatAm, USA,

Mexico and to Industrial markets in China and LatAm: spreading safety benefits

* Previous generation product (before Cinturato line)

** The Seal Inside is effective for the majority of the punctures apart from the ones that are compromising the integrity of the tyre

* *

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SAFE FOR THE PLANET

Challenging environmental performance by referencing European Regulations Groupwide

DEVELOPING GREEN PERFORMANCE TYRES

Eliminating highly aromatic oils from the entire range of Tyre products Groupwide

In the EU, A-B-C class low rolling resistance related revenues will increase by 35%/year from 2011 to 2015

* Average Pirelli portfolio feature to date

Strong committment in the

development of the environmental-

friendly features of our products

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A wide and comprehensive Green Performance roadmap fully compliant with EU Tyre Labelling regulation

Actual

Generation*

2011

Previous

generation*

2007

Next step

2015

CAR TRUCK

Traction

Handling

Weight

Rolling Resistance Noise

Mileage

Retreadibility

Tear

Resistance

Braking

Rolling

Resistance

Mileage

Noise Dry grip

Wet grip

Weight

Less rolling resistance – less CO2 emissions

Less weight – less raw materials used / less impact on natural resources

Increased mileage – increased tyre life

Less noise – better living environment

Increased retreadibility – less waste

Accident frequency rate continuous

and marked reduction

INVESTING IN RESPONSIBLE PROCESSES FOR OUR PEOPLE

Updating and streamlining Pirelli

plants to have less than 10-year-

old equipment produce 60% of

the total output by 2015.

More than rules approach:

continuous focus on spreading

the culture of safety, engaging

and involving employees in day

by day risk evaluation and

prevention

Plant-to-plant sharing and

dissemination of best practices

OCCUPATIONAL HEALTH & SAFETY

Group target: -60% in 2015 vs. 2009*

2009 2011 2015 2010

1.76

-60% -13% -26%

1.53 1.3

0.7

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* Subject to JVs integration effects

CARBON MANAGEMENT

More than 100,000 tons of CO2

saved in the last two years

Group CO2 emission target: -15% in 2015 vs. 2009**

INVESTING IN RESPONSIBLE PROCESSES FOR THE PLANET

Increasing energy efficiency in our plants

Integrating renewable energy in our industrial process

The climate change challenge also requires proactive cooperation from non-carbon intensive companies*.

Pirelli is actively working on reducing its carbon impact.

in ton/ton of finished product

* Our industry is not included in the Emission Trade Scheme list of carbon intensive industries

Group Carbon Footprint calculated by 2013 (scope 1+2+3 emissions)

1.05 1.00 0.96 0.89

-4,7% -8,3% -15%

2009 2011 2015 2010

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** Subject to JVs integration effects

WATER MANAGEMENT

More than 2,000,000 m3 of water saved every year

SECURING RESOURCES ESSENTIAL FOR LIFE

Water is a social responsibility also for non-water intensive companies.

Pirelli is actively working on reducing its water withdrawal.

Streamlining Pirelli water management processes

Extending best Pirelli technology group-wide

Group water withdrawal target: - 70% in 2015 vs. 2009*

Group Water Footprint calculated by 2013

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2009 2011 2015 2010 in m3/ton of finished product

-11,5% -28.9%

16.2 13 5.5

-70%

18.3

* Subject to JVs integration effects

TAKING OUR SUSTAINABILITY MODEL

BEYOND OUR BOUNDARIES

NEW INDUSTRIAL REALITIES

Respecting cultural differences, Pirelli responsibly strives to unite its affiliates

on the basis of values, policies and rules applied worldwide

Russia

Joint Venture

Indonesia

Joint Venture Mexico

Greenfield

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Governance & Compliance

Environment

Social Committment

Definition and deployment

of local plans to harmonize

Group policies worldwide

NEW SUPPLIERS MANAGEMENT WEB PORTAL*

All industrial sites covered by the web portal

by 2012

4 areas of analysis

1 totally dedicated to Sustainability: social committment (labour and H&S)

environment

business integrity

EXPORTING RESPONSIBILITY

THROUGH THE VALUE CHAIN

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Weight of Sustainability score

is 33% on final selection rate

On-line training on

sustainable management for

key suppliers

*Tool developed on SAP SRM

ENGAGING END USERS

AND INVESTING IN COMMUNITIES

Pirelli Sustainability Day 2012

“Driving sustainability: a safe road to the future” (Milan, January 23, 2012)

End-user engagement through Social Media and On-Line Surveys

Road Safety Education Program

Making road safety culture mainstream

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Youth integration projects through vocational training and sports

Leverage on Formula 1 to gain public support

Investing in communities development

VALUING OUR PEOPLE

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EMPOWERMENT

BE AN

EMPLOYER

OF CHOICE

Enhance non-financial targets in Executives evaluation

system

Maintain alignment with shareholders„ interests

through Long-Term Incentive plans

Launch of a new 3-year international recruiting program for graduates

Focus on middle management worldwide

Regular consultation of our Employees through opinion surveys

Applying welfare guidelines for Employees worldwide

Focus on competence development in all main

Functions

Further increase the very high level of T&E investment:

from 6.3 man/days on average in 2010 and 2011 to 7

man/days on average for the forthcoming years.

MERIT & ETHICS

DIVERSITY

LEADERSHIP DEVELOPMENT

DIALOGUE

RULES

TRAINING & EDUCATION

PIRELLI TYRE - 2009-2011 Management Plan

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