OVS S p A : Sustainability Report 2023 - New layout

MAKING PROGRESS

SUSTAINABILITY REPORT 2023

Change is possible

Our journey to 2030,

through vision and action

SUSTAINABILITY PLAN	FIRST FOR	CIRCULAR
2024-2026	TRANSPARENCY	OPERATING SYSTEM
The new strategic	First, for the third	Integrating
plan and objectives	year running,	circularity into
towards Sustainable	in the Fashion	the business.
Development Goals.	Transparency Index.

Contents

VISION

1. Interview with Stefano Beraldo, CEO OVS S.p.A.

1. Our brands

1. Key Numbers

1. Our path

1. Interview with Simone Colombo, Head of Corporate Sustainability OVS S.p.A.

DESIGN FOR CIRCULARITY

1. Our contribution to the Sustainable Development Goals (SDGs)
2. More sustainable materials

42 Interview with Adriano Goldschmied, Denim fashion designer

BEING FAIR AND TRANSPARENT

1. Our contribution to the Sustainable Development Goals (SDGs)
2. Code of conduct

1. Wages and worker representation systems

1. Bangladesh, a strong and lasting partnership

1. Interview with Anne Marie La Rosa, Head of ILO

1. Our presence in Myanmar

1. Sector collaborations

DESIGN A BETTER WORK

1. Our contribution to the Sustainable Development Goals (SDGs)

1. Life in OVS
2. From job search to professional growth

1. Training and skills development

1. OVS per Me

1. The value of remuneration
2. New work organisation
3. What can OVS do to improve its impact on the planet?

MAKING FASHION A BETTER CHOICE

1. Our contribution to the Sustainable Development Goals (SDGs)
2. Transparency first
3. Customer awareness

1. Interview with Filippo Piccione, OVS Retail Director Italy

1. Unsold stock management and reconditioning mechanisms

1. A second life for used clothes
2. Earth Day 2023
3. Christmas Jumper

DETAILS

104 OVS group profile

1. Stakeholders and Materiality

1. Indicators breakdown

1. European Taxonomy

1. Methodological note and reading guide

1. GRI Content Index

1. External Assurance

1. Sustainability-LinkedBond

236 Notes

01

Vision

Our journey, our thought

HIGHLIGHTS

• Group market share: 10%
• Towards decarbonization
• New sustainability plan 2024-2026

01 Vision

Stefano Beraldo

Chief Executive Officer

OVS S.p.A.

LETTER TO STAKEHOLDERS

How is the product offering evolving? What role does sustainability play in the design of collections?

We are moving into new product segments. These include the world of sport. An important milestone this year was the launch of Altavia, the ski collection designed in collaboration with Deborah Compagnoni. We want to reach all athletes who are looking for garments that combine quality and surprisingly affordable prices, always with an eye

on product sustainability features. The padding of Altavia jackets and trousers are 100% recycled polyester, as are the sweatshirts and thermal underwear, and the next fall-winter collection will see a further increase in the use of recycled materials, also in the fabrics of the jackets and trousers.

introduction of an increasing percentage of recycled fibres.

What role can OVS play in the business transition towards more circularity? Thanks to the capillarity of the sales network, OVS can address the awareness of millions of people. The path towards transparency is well established. This year for the third time we came first in the Fashion Transparency Index compiled by Fashion Revolution.

• We dedicate more and more
  attention to the various

lifestyles that characterise the

plurality of our customers,

What distinguished the year just ended? In 2023, our growth continued. We have achieved a market share approaching 10%. For the third year in a row, growth is mainly due to the good performance of existing stores. Despite this, we are in line with our plans to reduce our impact in absolute terms, which leads to an even better result when considered on a like-for-likebasis than in previous years. All this is the result of the changes introduced in recent years. We have improved the quality and stylistic content of the product, and are able to satisfy a wide range of customers with different needs. We dedicate more and more attention to the various lifestyles that characterise the plurality of our customers, to each of which we match a dedicated product type, and often a brand capable

of representing it.

Alongside this evolution is the path we started almost ten years ago to limit the negative impacts of our business. Our commitment to decarbonisation, in order

to achieve the targets approved by the Science Based Targets initiative, continues and drives the company's strategies on store energy efficiency and material portfolio evolution.

The collaboration with Adriano Goldschmied is also a step in the long- term project on product sustainability. The denim strategy includes experiments with low-impact dyes and materials and the

to each of which we match a dedicated product type, and often a brand capable of representing it

"

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2023 Sustainability Report

Making progress

01 Vision

With the Eco Value indicators, we provide our customers with all the information they need to make informed purchases.

Fashion is, by its very nature, change and the life cycle of products is to a large extent linked to market dynamics. Now the challenge is to continue to improve the durability of the garments we sell. With this objective, and thanks to more efficient purchasing and production processes,

we are working to propose an offer characterised by greater quality and style that will last over time, while maintaining affordable prices. It is also necessary to involve the customer in this process by offering in-store services that can help extend the life cycle of garments: recycling, reuse, tools for repairing and customising used products.

What goals does OVS have in the short and medium term?

I am a great believer in experimenting with more sustainable business models that, although limited, are strategic. I am thinking of the financing of cotton cultivation in Sicily, but also of all the potential innovations in the field of textile fibre recycling and the reuse of clothes. During 2023, activities continued to develop the technological innovation and logistics hub in Apulia. It is the place where projects dealing with circular economy issues and potential applications of artificial intelligence will be channelled.

" We are working to propose an offer characterised by greater

quality and style that will last over time, while maintaining affordable prices

"

8

Quality and

Sustainability

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2023 Sustainability Report

Making progress

01 Vision

Our brands

OVS - Leading Italian brand in the clothing market. It offers a selection of contemporary and essential style, with excellent value for money and great attention to sustainability in the choice of materials and production processes. The brand has increasingly evolved from a vertical retailer model towards a platform logic, both physical and virtual, with the introduction of a curated selection of iconic brands and innovative propositions, each catering to a specific lifestyle.

With around 1,300 stores, OVS is present in Italy and abroad, in major city centres, shopping centres and residential areas.

OVS KIDS - Brand leader in the Italian children's clothing market, with a double- digit market share. Its target audience are children, 0 to 15 years old, with a competitive, high-quality offer that pays great attention to the selection of certified raw materials and the creation of garments that are both stylish and practical. It is present in Italy and abroad with direct and franchise stores.

PIOMBO - Contemporary brand of clothing for men, women and children, designed by Massimo Piombo. The collections express the taste and talent of the well-known Italian designer in the research of fabrics and care for details and combinations of shapes and colours. It is present in Italy with shop-in- shop in over 500 OVS stores and with a flagship store in Cortina d'Ampezzo. From 2023, it started an international expansion project, opening new stores in New York, Madrid and Paris.

UPIM - Italian family department store, a benchmark for a shopping service that is convenient, accessible and targeting the actual needs of families. It offers a service that is close to the community, with a wide and varied offer ranging from clothing for the whole family, to beauty and home.

It is present in Italy and abroad with more than 300 full-format stores, most of them direct, in city centres, shopping areas and residential areas, and with a shop-in-shop formula inside the hypermarkets of major retail groups.

BLUKIDS - Blukids is a brand specialising in clothing for children aged 0 to 15. It proposes garments that are certified and of high quality, always at a competitive price. Blukids is present with 350 stores in Italy and abroad and with more than 300 corners in Upim stores.

CROFF - Italian brand for home decoration dedicated to those who love easy, informal contemporary design, to be experienced and lived in every day. Italian design products, with unique style and excellent value for money. The collections, with their unique style and excellent value for money, are the result of a careful selection of European and international manufacturers.

CROFF is present in Italy with stand-alone,shop-in-shop formats in Upim stores, city centres, shopping areas and residential areas.

LES COPAINS - Iconic Italian brand, acquired by OVS S.p.A. in 2022, which stands out for its versatile and refined style, aimed at a contemporary woman who chooses to express herself with elegance at different times of the day. Les Copains is present on the market with stand-alone stores and corners inside Upim stores.

STEFANEL - Italian contemporary clothing brand dedicated to women, famous for the design and quality of its knitwear. Founded in 1959, it has been part of the OVS Group since 2021. Acquired by the OVS Group in 2021, it is present with more than 100 stores in Italy and abroad, with direct and franchised stand-alone formats, and with corners inside department stores.

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2023 Sustainability Report

Making progress

Key numbers

2,245

Stores worldwide

8,280

Employees worldwide

1,535.6 MLN EUR

Revenue

9.6%

Group Market Share

94%

OVS brand global awareness

01 Vision

OUR PATH

In recent years, we have been witnessing a paradigm shift in the fashion industry driven also by increasing regulatory and media attention to the social and environmental impacts generated by clothing production. At European level, emerging regulations reflect this growing awareness, incentivising companies to review their practices and business models. Concepts such as "carbon footprint", "circularity" and "biodiversity" have become central to corporate strategies. Regulatory and social pressures have also led companies to review their supply chain management, adopting stricter due diligence practices to ensure product traceability and respect for

workers' rights throughout the supply chain. Companies in the fashion industry today face a crucial challenge that requires a strong adaptation to the

new context.

" Transparency is one
of the most important
values for us, which
guides our way
of thinking,
act and communicate	"

In this scenario, consumers also play a key role: although awareness and attention are high, only effective and transparent communication by companies can guide them towards more sustainable, intentional and conscious choices. Consumer confidence depends on the ability of brands to demonstrate a genuine commitment to sustainability and provide clear information on the origin of materials, working conditions and the environmental impact of their products.

One of the founding values of OVS has always been transparency, that distinguishes our way of thinking, acting and telling. We decided to embark

on our sustainability journey several years ago: this has allowed us to learn from our mistakes and also to achieve ambitious goals, thus paving the way for a successful current paradigm shift.

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2023 Sustainability Report

Making progress

01 Vision

In a rapidly changing landscape, we are aware that adapting to new environmental and social requirements is no longer

a choice, but a pressing necessity for companies in our industry that aspire to thrive in the market of the future.

-46.2% Emission reduction by 2030 compared to the 2019 baseline

Towards carbon neutrality In 2023, we continued the decarbonisation plan according to scientific parameters approved by the Science Based Targets initiative.

We are on track with our plan to reduce emissions (by 46.2% by 2030 compared to the 2019 baseline) and thanks to

all the activities we have carried out in recent years, we have thoroughly understood the structure of our carbon footprint and identified more and more precisely the elements that influence it.

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In the course of 2024, the year in which the Sustainability-linked bond cycle will end, we will report on the objectives achieved and at the same time define new targets, setting a new baseline to bring it more in line with the changed company organisation, which sees a growth in third-party brands, an increase in the incidence of e-commerce and more space for previously more marginal sectors such as cosmetics and perfumery.

40%

Goal of electricity needs covered by photovoltaics

As far as direct impacts are concerned, we will continue with our strategy of investing in the creation of new renewable energy sources, rather than purchasing certified renewable energy produced

by third parties. We will continue our programme of installing photovoltaic systems throughout Italy, which has led us to have more than 50 systems by 2023, with the goal of fully covering 40% of our electricity needs through photovoltaics. We will achieve this through the installation of self-generation plants with on-site exchange and through investment in larger photovoltaic parks and simultaneous activation of PPA.

+50 Photovoltaic systems throughout Italy by 2023

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ESG RISK RATING: OVS IN FIRST PLACE IN THE FASHION SEGMENT

The correct identification of the areas of action and the quality of the results achieved have been confirmed by in- depth studies with investment funds that are shareholders in OVS and independent assessments by sector analysts.

In January 2024, the OVS ESG Risk Rating is 9.1 in the "Negligible" category, placing the company in 1st place out of 208 (where 1st place is the company with the lowest risk rating) in the "Textile & Apparels" sector assessed by Sustainalytics.

Out of 208 companies in the "Textile & Apparels" sector, with 9.1 ESG Risk Rating

1STPLACE

2023 Sustainability Report

Making progress