Avio S p A : 2020 Non Financial Report

CONSOLIDATED NON-FINANCIAL STATEMENT

2020

Pursuant to Italian Legislative Decree 254/2016

Avio Group

Gruppo Avio - Dichiarazione Consolidata di Carattere Non Finanziario 2019

Index

Message to the stakeholder	2
Note on methodology	5
Applicative Standards	5
Scope of the Statement	6
Reporting process	6
1.	Avio Group	7
	1.1.	The Group's structure	10
2.	The prioritization of relevant topics: Avio's materiality matrix	12
	2.1.	The Sustainable Development Goals and Avio's priorities	15
	2.2. Dialogue with stakeholder	19
3.	The Governance of Avio Group	21
	3.1.	Approach to taxation and tax governance	24
	3.2. Recall of CONSOB information	26
4.	Internal control and risk management systems	27
5.	Avio's responsible business management	32
	5.1.	The identity of the Group	32
	5.2. Code of conduct	32
	5.3. Policies for the management of Environmental, Social and Governance aspects	34
	5.4. Business ethics and fight against corruption	34
6.	Avio people	38
	6.1. Human capital management and retention of talents	41
	6.2. Training and skills development	43
	6.3. Staff Remuneration	46
	6.4. Health, safety and wellbeing of employees	48
	6.5. Dialogue with trade unions	54
7.	Innovation	55
	7.1.	Technological innovation	55
8.	Quality and safety in Avio	58
	8.1. The quality of the company's processes as a safeguard for the quality and safety of products and services	60
	8.2. Safety in industrial management	60
	8.3. Security of access to the premises	62
	8.4. Cybersecurity	62
9.	The responsible relationship with suppliers	64
10. Avio Group's environmental impact	67
	10.1. Energy consumption and emissions	69
	10.2. Management of water resources	73
	10.3. Waste management	75
	10.4.Environmental remediation and management of areas subject to potential environmental issues	78
11.	Relationship with the community	80
12. Table of connection between material topics and aspects of the GRI Standards	82
12. GRI Content Index	83
13. Auditor's report	94

2	Avio Group - Consolidated Non-Financial Statement 2020

Message to the stakeholder

Dear Sirs,

We present the fourth edition of the Consolidated Non-Financial Statement of the Avio Group, a document that tells the story integration of Environmental, Social and Governance issues within our business model and what has been achieved, thanks to the management of all levers that can combine responsible development and competitiveness: the innovative technological solutions that we are called to implement, the experiences and skills of all our people, the consolidation of our strengths points, the link with the territory and the careful management of risk areas

Avio's business model considers sustainability and innovation to be an indispensable combination. We are aware that the potential of the Space Sector in supporting the UN Sustainable Development Goals (SDGs) is very broad: starting from the countless satellite applications in the management of environmental resources and the local effects of climate change, to the facilitation of telecommunications and logistics management, to the application satellites used to monitor crops and make production and consumption more efficient.

To be even more effective in this direction, on the occasion of the inauguration of our new board of directors in April 2020, it was decided to set up a new internal board committee that has the sustainability of our Group as its strategic and priority instance and that can broaden and better define its vision with the aim of accelerating the operations of the entire Group in this direction, starting its path immediately in 2020.

The coronavirus emergency that hit the whole world in 2020 naturally led to important limitations and slowdowns in some activities. Nonetheless, which the Avio Group has managed to face while managing to maintain the entire production continuity thanks to the prefectural authorization issued on 24 March 2020 due to the strategic importance of the Group's activities for the Italian national economy. Among other things, the epidemic and the restrictive measures imposed by the government and the French authorities in charge also led to the temporary suspension of the preparation activities of the launches from the Kourou base in French Guiana.

The epidemic and the restrictive measures imposed by the government and the French authorities in charge led to the temporary suspension of launch preparation activities from the Kourou base in French Guiana.

In this context, the Group has always activated and worked in order to face the COVID-19 emergency by immediately implementing all government provisions, as well as putting into practice all the national protocols envisaged.

In this regard, Avio has set up an internal COVID-19 Committee which has put in place immediate risk mitigation actions. Among these, the use and facilitation of smart working and the so-called agile work for activities that can be carried out remotely, the limitation of movements and access to plants also extended to suppliers and consultants, methods of conducting meetings and meetings in compliance of the law, built additional offices in order to guarantee the correct distancing between employees, internal communication methods through timely dissemination of COVID-19 notices to all employees using the IT platform.

In line with the consolidated collaboration of the Group with local administrations of the areas in which it operates and the conscious role that Avio intends to play with respect to the economic and social needs of the local communities, it should be noted that the Board of Directors has approved two donations for a total of 500,000 Euro, respectively in favor of the Hospital of Kourou (in French Guiana) and the Civil Protection of Colleferro in order to help fight the COVID-19 emergency.

During the year, in line with the strategic and operational guidelines of the Industrial Plan, significant production and development activities were conducted despite the COVID-19 emergency. In particular, regarding to flight activities, 3 launches

Avio Group - Consolidated Non-Financial Statement 2020	3

of Ariane and 5 launches were successfully carried out while corrective actions were completed after the VV15 failure, for return to flight of Vega with the VV16 successfully carried out on September 2, releasing 53 satellites in a 'single mission by means of the new adapter called SSMS. The subsequent flight VV17 on 17 November unfortunately failed to place the satellites in orbit due to a loss of the launcher control, immediately downstream of the IV stage ignition. Following the failure, the work of an independent commission of inquiry chaired by Arianespace and European Space Agency (ESA) was started which identified in short time the causes of the mission failure and defined actions to be implemented for a return to flight of the launcher scheduled for April 2021 with the VV18.

The other significant activities carried out during the year also include the start of construction activities for the "Space Propulsion Test Facility" (SPTF), within experimental joint-force polygon of Salto di Quirra in Sardinia on construction of a test bench for liquid engines and a plant for the production of carbon-carbon components.

The people who work in Avio, with their experience and skills, are one of the main factors of our success. We strive to maintain strong internal cohesion, both through adequate incentives and improvements in corporate well-being and through the creation of motivating training courses and events for sharing behavior and objectives.

Furthermore, in line with the principles of environmental sustainability, the Company continued a series of actions to reduce the use of natural resources, particularly to water consumption, and carried out the commitment to redevelop and reclaim the areas of Colleferro district, a precondition activity for development and economic growth of the area in which we operate.

During 2020, we also made important steps forward in terms of responsible management of the supply chain by introducing, through specific procedures, a process of recording and evaluating the social and environmental policies of the suppliers themselves in order to have a global vision of their commitment to sustainability.

Finally, our approach is completed with further aspects such as a strong focus on the system value and human rights which were reflected, in 2019, in the continuous spread of the anti-corruption culture, in line with our Code of Ethics and Anti-corruption Code, as well as through the updating of the Organization, Management and Control Models pursuant to Legislative Decree 231/01 - with particular focus on subsidiaries - and in the preparation and approval, in the first months of 2021, by the Board of Directors, of a new Diversity Policy of the Administration and Control Bodies.

During 2020, Avio also confirmed its adhesion for the next two years to the Business Integrity Forum (BIF), an initiative of Transparency International Italia which brings together large Italian companies already active on the issues of integrity and transparency and through the BIF undertake to prevent and fight corruption in business practices, by adopting and disseminating anti-corruption tools and practices and a greater culture of legality as well as participating in the activities organized by the Italian Transparency and Anti-corruption Association.

We are aware that this is a necessary path that every year will see us at the forefront to respond to great global challenges of the sector, also in consideration of our strategic role and our positioning as an engine of development and growth of the Space Economy with a view to medium-long term.

CEO	Chair
Giulio Ranzo	Roberto Italia