Ariston N : "ROAD TO 100" ESG PLAN

Road to 100

2030 Ariston Group ESG Plan

Road to 100

2030 Ariston Group ESG Plan

Find out more atwww.aristongroup.com

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Index	Opening letter	4
		Ariston Group's ESG history	6
		Road to 100	10
	1. Solutions	Discussing Solutions with Donatella Sciuto	14
		Scenario	16
		Commitments	18
		Sustainable energy solutions	18
		Smart homes for sustainable living	22
	2. Operations	Discussing Operations with Raquel Espada Martin	28
		Scenario	32
		Commitments	34
		Resources productivity and circularity	34
		Responsible supply chain	38

3. People &	with Will Smith	44
	Discussing People & Communities
Communities	Scenario	46
	Commitments	48
	Excellent employee experience & engagement	48
	Education for the future	52

4. Customers	Discussing Customers with Giorgio Migliarina	56
	Scenario	58
	Commitments	60
	Beyond customer proximity	60
	Trustworthy quality excellence	64
5. Governance	Discussing Governance with Laura Stein	68
	Scenario	70
	Commitments	72
	Long-sighted sustainable governance	72

Notes

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Letter on

Road to 100

Ariston Group's ESG plan to 2030

Paolo Merloni

Executive chairman

Dear all - our people, our customers, our partners, our suppliers, and stakeholders and shareholders

As the Executive Chairman of a global group founded 93 years ago by my grandfather Aristide in Fabriano, a small village in central Italy dating back to Middle-Age, and approaching its 100th anniversary, I have been reflecting upon the pillars to orient, drive and sustain Ariston Group's pathway to 2030.

Certain to speak also on behalf of all Ariston Group's management and people, I have personally always felt a strong sense of responsibility towards society at large; hence, I do look at this upcoming remarkable milestone

• 100 years of Ariston Group - as the opportunity to reaffirm the role we want to play in shaping the economic, social and environmental future ecosystems we operate in.

Aristide Merloni, as far back as in 1967, affirmed that there is no value in the economic success of

any industrial initiative unless it is accompanied by a commitment to social progress. Such a visionary commitment towards our people and all the communities of our stakeholders duly accompanied us over our history. Nowadays, due to the tremendous impact that buildings' decarbonization will have on global emissions reduction, the thermal comfort industry is at the center of the energy transition; it becomes therefore ever more evident that delivering a better world to the future generations is a task that Ariston Group must master.

This is an ambitious goal, and we decided to address it systematically by linking the five Corporate Values that have accompanied us over last 15 years - Believe in Sustainability; Inspire through Excellence; Start from Customers; People come First; Act with Integrity - into specific, measurable ESG commitments that are deeply rooted in our Corporate Strategy.

Mitigating our impact on the environment is a challenge that we first of call start tackling from our Solutions, which account for the vast majority of our environmental footprint: our key commitment is to continue developing and bringing to the households of our customers renewable and high efficiency products and systems that leverage the most innovative technologies and are equipped with advanced connectivity features. In parallel, we are working to enhance resources productivity and to implement circularity into our Operations, also engaging responsibly with our supply chain.

The reduction of our emissions in Scopes 1, 2 and

3 remains at the core of our effort: by 2030 we commit to reducing Scope 1 and Scope 2 emissions by 42% in respect to 2021 and we set for ourselves the ambition to reduce by more than 50% our Scope 3 emissions from use of sold products per million euro of value added compared to 2021 baseline. In addition, we have stretched our ambitions to achieve the ultimate objective

of 100 million tons of CO2e emissions avoided by 2030 thanks to the type of products we sell in the regions we operate.

Our pledge to sustainability will go nonetheless much further than Solutions and Operations. Helping People to thrive, a customary commitment throughout Ariston Group's history, will be part of our ESG plan, extending it beyond our teams of colleagues worldwide to the local communities we are active in. In addition, we are determined to continue to excel in our mission to anticipate and exceed our Customers' needs by improving proximity and by delivering best-in-class quality.

To pursuing such extensive yet essential objectives urges to establish, nurture and defend a solid Governance framework. We have always considered transparency as a prerequisite value: our first Social Responsibility Report dates back to 1979. Since 2004 (17 years before our IPO in 2021) we established and progressively improved a governance that mirrored the best practices of listed companies and since 2018 we have been consolidating and reporting our non-financial performances, besides fiscal results. In 2020, we set-up an ESG Committee at Board of Directors' level as well as an ESG Council operating at the Group's Executive level to further increase our ESG focus and sharpen our capability to address the sustainability challenges. It is hence as a proud member of Ariston Group's ESG Committee, and once again speaking as well on behalf of my fellow Executive colleagues, that I can seal my letter to you affirming that sustainability, in its broadest sense, is one of the Ariston Group's founding pillars: it permeates our culture at all levels and roots in the way we do business, being inextricably linked with our capability to perform and succeed.

As our ESG commitment will continue to drive Ariston Group's future development, Road to 100 is intended to be our strategic manifesto, renewing our ambitions and projecting bridges to our future.

Sincerely,

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Ariston Group's ESG History

How we got here and the path

towards our Centenary	This vision represents the engine of Aristide's socially focused decision to structure the
Company's production sites in the region with the following aims: ensuring proximity between
		the workplace and workers' homes, enriching less fortunate communities through industrial
		development and the densification of urban conglomerates and enhancing human engagement by
		limiting the number of employees per production facility. The commitment to guarantee a strong
The history of Ariston Group began in 1930, when		connection between Ariston Group and its local communities is further testified by the Aristide
Aristide Merloni founded in the Marche region,		Merloni Foundation, originally established in 1963 and still in operation today to support emerging
in central Italy, Industrie Merloni, a factory that produced		businesses in fostering employment and entrepreneurship, ultimately leading to economic and social
weighting scales. Over the years, the Company has		development. The Foundation became an economic and social research hub and, subsequently,
grown considerably through the organic opening of new		an established and highly regarded educational entity. Indeed, it is social progress that has, ever
markets and industrial sites across Eastern Europe,		since, guided the Company's strategy and growth. Immediately acknowledged, such commitment
Asia, Africa and the Middle East, as well as through		brought the Company to receiving the "Social Responsibility" award in 1974, sponsored by the
a strong inorganic expansion that has made the Group		Vision magazine and the PA consulting firm, a prize intended for businesses that could anticipate
one of the largest consolidating players in the sector.		and contribute to communities' needs, foster initiatives towards a progressive industrial ecosystem
It has a track record of 18 acquisitions including Atag		and improve relations with the surrounding environment.
and Heat Tech Geysers (2014) in Europe; NTI (2016),
HTP (2017) and Calorex (2019), which led to the		Another fundamental milestone in the Group's sustainable growth path dates back to January 25,
consolidation of the business in the North American		1979, when the Merloni Finanziaria S.p.A. (the initial name of the Company) became the first Italian
region; Chromagen (2021) focused on renewable water		company to disclose a Social Report. This publication marks a pivotal moment as, for the first time,
heating solutions with a leading position in Israel and		non-financial assets were also taken into consideration when assessing the value of a company.
a solid foothold in Australia; and CENTROTEC Climate		Since then, Ariston Group has set the course for non-financial reporting in Italy, whilst being at the
System (2022), in Germany, a pioneer in natural		forefront of this fast-evolving area of sustainability in Europe. The document included the reports
refrigerant heat pumps. Along its internationalisation		for 1975, 1976 and 1977 and was focused on both internal and external social aspects. Already
process, in November 2021, the Company was listed on		ahead of its time, it addressed topics which, today, play an increasingly more important role in
the Euronext Milan stock exchange, closing the biggest		terms of ESG reporting. In fact, in addition to the typical financial indicators, the Report included
IPO over three years. Rebranded as Ariston Group		some rather innovative social and environmental indicators that are listed below**.
since 2021, the Company is one of the global leaders
in the sustainable thermal comfort sector, with 5
representative offices in 42 countries, 25 production
sites and 25 R&D centres across 5 continents*.			Innovative Social and Environmental Indicators
This leadership position has always been accompanied		Financial indicators
by a far-sighted sustainability commitment, already		• Value-added and its breakdown	• Tax contribution	• Training initiatives
deeply rooted in the philosophy of its founder:
		• Number of employees	• Territorial improvement	• Safety and comfort (e.g. housing, canteen)
		• Foreign trade	• Regional development	• Environment (e.g. water consumption)
There is no value in the economic	• Relationship with suppliers	• Employment dynamics	• Applied research
• Technology balance sheet	• Employee characteristics
success of any industrial initiative,	• Productivity
unless it is accompanied by a
commitment to social progress.	* 2022 data

** Chapters of the Ariston Sustainability Report as published by the Battelle Institute in 1979.

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The Report was based on the Battelle's Institute standards structure, whose goal was to assess a company's social and sustainability performance towards its employees, consumers, local communities, shareholders and other economic partners.

By following these standards, Merloni Finanziaria S.p.A. was already measuring the number of employee training hours and accounting for the total number

of hours spent by employees on apprenticeships. It was also reporting on the consumption of non- renewable raw materials, establishing an indicator which measured the proportion of recycled materials in its total raw material consumption. The Battelle Centre de Recherche de Geneve, the Institute which published Industrie Merloni's Sustainability Report, selected the Company precisely because of its original industrial philosophy, a commitment for corporate social responsibility that has accompanied Ariston Group in its growth over the years, becoming a core element of its corporate identity. Today, the very core values it relies upon are still deeply rooted

in the cultural and industrial heritage of its founder: the Group firmly believes in sustainable development and strives to constantly improve itself through innovation, education, teamwork and integrity.

This ultimately led to the definition of Ariston Group's purpose: "Sustainable Comfort for Everyone". A purpose that translates into the commitment to provide everyone, across the globe, with high- quality heating and hot water solutions, while preserving the environment. The Group is focused on ensuring the greatest comfort at the lowest energy cost, providing worldwide access to the most efficient technologies. To strengthen and renew its commitment, in 2018 the Group defined its strategy and goals that would lead the Company to incorporate sustainability into its core strategy by 2022. As a result, it laid out

It is also the starting point of the ESG Strategic Plan to 2030, which strengthens the Company's commitments, embedded in its DNA since its very foundation.

A new phase has hence begun: the Group has embarked on a new journey and is thrilled to share these commitments with its stakeholders.

HOW DID WE GET HERE?

2022 marks the end of the first phase of Ariston Group's sustainable journey. A new vision has therefore been developed with the key purpose of leading the Company towards 2030 through a clear roadmap, pivotal in supporting Ariston Group in the achievement of its strategic ESG objectives.

As a leading actor of sustainable development, the Company is aware that sustainability means a long- term vision and objectives, which can be achieved only through a solid path of actions and initiatives. This is the reason why the Group's 2030 ESG roadmap sets out a detailed and structured plan built on short- and medium- term targets, which will eventually lead the Company to the achievement of its ultimate 2030 targets. Yet, an important question arises: how did we get here?

This vision was made possible through an engagement process operating on three different levels. First, the Group's key stakeholders were engaged to help renew the Company's materiality analysis, a process underway since 2017.

From the identification of potentially relevant topics, following a thorough context analysis, a shortlist of 9 material topics, considered as most relevant to the business and its stakeholders, was defined, carefully assessed based on their economic, environmental and social impacts.

eventually mirrored the key challenges the Company intended to tackle in the near and longer- term. As a result, 5 engagement areas were defined. Finally, managers were subsequently engaged to help define - through SWOT analyses and a path of progressive convergence

• clear-cutobjectives and supporting initiatives corresponding to 9 material topics. The process involved all Corporate as well as several local business functions, giving voice to more than 50 individuals. The Group's ESG plan thus came into existence thanks to a 360-degreesengagement of internal and external stakeholders, making it possible to align the business' goals and ambitions to the specific contextual challenges.

The 5 engagement areas that define the key pillars on which Ariston Group has set its ESG strategical direction involve solutions, operations, customers, people & communities and sustainable governance. These areas are, in turn, divided into the 9 material topics.

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1. Solutions

				Smart sustainable
				comfort for a better future
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		5.	Building a	2.	educ
Safeguardthe			dlsel
		Governance	sustainable future	Operations
			Creating value		A decarbonised
			responsibly	Sustainable comfort, social	business with a
				progress and our planet at	circular approach
				the centre of all we do.
				Since 1930.

specific targets closely monitored each year, including establishing a sustainability governance framework.

In 2021, after launching an Initial Public Offering and getting listed on the Euronext Milan stock exchange, the Group defined a new ESG vision, which was further developed in greater detail in 2022.

The vision, which marks the path towards the Group's Centenary, is focused on three key topics: sustainable comfort, social progress and our planet's wellbeing.

Next, on the basis of the material topics, the definition of a forward-lookingand strategic ESG plan started to take shape. The process began with an in-depth market benchmarking and analysis of ESG pressures arising from relevant policies and trends, which enabled the identification of key challenges and opportunities on each material topic. Once these were outlined, the Group's top management, who serves on the ESG Council, embarked upon an envisioning phase to draw out the key engagement areas that the Company could focus its business strategy on. These engagements

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4. Customers

Exceeding expectations through excellent customers experience

business stakeholders

3. People & Communities

Empowering people to achieve more

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The impact on communi

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Road to 100

Main 2030 objectives

3.People & Communities

Excellent employee experience

and engagement

Towards

1. world-classemployer

Be athat builds a sustainable working environment

1.Solutions

100 mln

tCO2e emission avoided thanks to the

Education for the future

Drive innovation through inclusive education projects

Countries engaged in projects that foster

100% awareness on sustainable thermal comfort

as an enabler for social development

Sustainable energy solutions

Enable the energy transition with renewable,

we sell in the regions we operate

4.Customers

Smart homes for sustainable living

solutions	>5 mln	of connectable
	products sold

Beyond customer proximity

Be on our customers'	Deliver excellent, tailored solutions
side along their full
and services to B2B and B2C customers
journey through
and increase the loyalty of professionals
thermal comfort

2.Operations

Excellence services		Quality score per year in the
& support along	>85
cumulative Group Quality
the whole product

Turn Ariston Group into a climate neutral industrial ecosystem

42%	Scope-1 and Scope-2 absolute GHG
emissions reduction (2021 base year)
>50%	Scope 3 GHG emissions reduction
per milion euro value added (2021 base year)

Trustworthy quality excellence

Excellence index (GQE index)

life cycle

Resources productivity and circularity

Responsible supply chain

Leading the sustainable transformation in the value chain

NEW	Sustainable Packaging
OBJECTIVE
100%	Strategic Suppliers aligned
with our ESG journey

Long-sighted sustainable governance

5.Governance

Continuously enhance

a responsible ESG	Ongoing yearly commitment to meet high
approach in	governance standards on sustainability
everything we do

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1.Solutions

Smart sustainable comfort for a better future

Solutions

OperationsPeople & Communities CustomersGovernance

Discussing Solutions with key opinion leaders

Rector of Politecnico di Milano

Donatella Sciuto

The UN Climate Change Conference COP28 held in Dubai marked an important moment in the global commitment to transition away from fossil fuels.

Such a commitment will have a clear impact on the thermal comfort sector, as buildings largely contribute to CO2 emissions. The clean energy transition is key to addressing climate change but also unlocks substantial opportunities in terms of market creation and employment growth. According to the International Energy Agency (IEA), major industrial value chains anchored in non-fossil technologies are expected to reach USD 650 billion by 2030.

Despite the market potential, transitioning from fossil fuels has its challenges. The geographic concentration of the production of clean technologies alongside that of the critical raw materials needed for their functioning poses significant difficulties. In fact, at least 70% of the production capacity for technologies such as heat pumps, batteries and solar panels is concentrated in three major manufacturing countries, with China holding the largest share. Moreover, the extraction and refining of critical raw materials such as lithium and cobalt takes place in a few regions only, leaving Europe highly dependent on imports. This aspect is currently being addressed by policy-makersand legislators particularly in light of the recent supply chain vulnerabilities that have left countries exposed to price fluctuations and shortages.

The very same technologies that are needed to unlock the transition and reduce costs in the long term, also require significant initial investments.

Public funds no longer suffice, and it is necessary to attract private investors. In parallel, companies need to be careful to avoid costs being shifted to consumers who are not able to bear this burden. From a socio-economic standpoint, a new model of wealth redistribution will have to be found in order to strengthen global consensus around the transformation needed to combat climate change. The upcoming decade will thus be decisive: electrification and the progressive shift from fossil fuels will guide our cities, industries and transportation.

Having set ambitious targets and increased its legislative efforts, the EU plays a leading role. With the Green Deal, the EU Commission has committed to becoming the first carbon-neutralcontinent by 2050. As a significant move towards carbon emissions reduction for

European buildings, the Energy Performance of Buildings Directive (EPBD) will soon come into force. Major objectives of this legislation piece include a 16% reduction in the average primary energy consumption of residential buildings by 2030 and a more ambitious 20-22% reduction by 2035. Importantly, at least 55% of said reduction plan is earmarked for restructuring the least efficient buildings.

In this scenario, it is clear that thermal comfort sector players will need to implement a significant technological shift in coming years, particularly with regards to building infrastructure. Electrification and heat pumps have a crucial role: the IEA predicts that the number of heat pumps installed globally will rise from 180 million in 2020 to around 600 million in 2030, with the EU market growing up to 50 million per year. Considering that to date buildings have relied mainly on gas heating, major opportunities will be unlocked for companies active in the thermal comfort sector. Yet, it is imperative for

EU manufacturers to accelerate the transition from gas heating and reinforce their production capacity for heat pumps. Only a collaborative approach and a shared policy that fosters cooperation in terms of production, R&D and supply chain efforts will enable European industrial actors to maintain a leadership position vis-à-vis external competition. Thermal comfort represents a sector in which coordinated action could for example also help consolidate production capacity of key components such as compressors - nowadays mainly manufactured in Asia

- lowering the risk of volatile supply chains.

Europe should focus on collective action aimed at creating a new technological paradigm with a new generation of highly efficient, circular and digitally enabled heat pumps. The link between digitalisation and decarbonisation is clear: in the near future it will be increasingly important to create a digital interface between local renewable energy production systems and buildings' energy use, ultimately improving demand flexibility. As we move forward, thanks to advanced digital technologies our buildings will increasingly interact with the electricity grid, ultimately leading to significant energy savings, reduction in peaks in demand and maximisation of renewables use.

Lastly, it should not be forgotten that the energy transition must not overlook people and communities. Achieving a decarbonised economy undoubtedly implies a societal transformation: only through the adoption of people-centricmodels will we be able to achieve climate goals while guaranteeing higher levels of well-being.

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Solutions

OperationsPeople & Communities CustomersGovernance

Scenario

A decarbonised pathway for the future

The European Green Deal sets ambitious targets for the EU: becoming the first climate-neutralcontinent by 2050. The European Climate Law also sets the intermediate target of reducing net GHG emissions by 55% by 2030, compared to 1990 levels. Buildings account for nearly one-third of global final energy consumption. In Europe, 62.8% of the total residential energy consumption stems from space heating and 15.1% from water heating1

In the thermal comfort sector, companies can implement high-efficiencyelectric heating equipment to replace fossil fuel technologies, expand hybrid solutions and invest in hydrogen as a key energy vector2. Today, only 10% of global heating in buildings3 relies on heat pumps and, in order to meet national energy security and climate goals, heat pumps sales would need to triple by 2030, leading to a 30% reduction in global fossil fuel use in buildings4

Over the coming decades, digital technologies are set to make energy systems around the world more connected, intelligent, efficient, reliable and sustainable. In buildings, digitalization could cut energy use by about 10% by using real-timedata5 to improve operational efficiency, ensuring thermal comfort when and where it is needed while also maintaining and increasing energy savings when heating and cooling are not needed

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