MATERIALITY ANALYSIS

In 2016 Pirelli initiated and completed the process of updating the materiality matrix elaborated in 2013.
The materiality matrix comes from an in-depth activity of Stakeholder Engagement that led to compare the expectations of key stakeholders on a panel of sustainability issues and the importance that these issues play in the success of the business depending on the experience and expectations of the Top Management and Sustainability Managers that support the Top Management in the various Countries where Pirelli operates.

Given the complexity and the international extent of corporate stakeholders and the variety of their expectations, the panel of stakeholders from which feedback was requested included:

  • The biggest original equipment customers;
  • 1,800 end customers belonging to the most representative markets;
  • The most important dealers;
  • Numerous employees in the various nations where the Group is present;
  • Several Group suppliers;
  • The leading financial analysts;
  • National and supranational institutions and public administrations;
  • Journalists from domestic and international newspapers;
  • International and local NGOs present in the various Countries in which Pirelli has manufacturing activities;
  • Universities that have collaborations with the Group.

The stakeholders were involved through a request, in local language, of attribution of priorities for action on a selection of ESG (Environmental, Social, Governance) issues relevant to the global and sustainable development of the automotive and auto components sectors, identified by considering the risks and opportunities arising from regulatory developments, the expectations of the communities, government and other institutions, and financial markets.

The issues the stakeholders evaluated are the following:

  • Product eco-innovation: research & innovation commitment to improve product impact on the environment (e.g. by reducing the tyre rolling resistance in the use phase allowing for fuel saving and thus CO2 emissions reduction, more mileage);
  • Product performance & safety innovation: research & innovation commitment to improve product performance/safety for the driver (e.g. tyre performance in wet conditions, reduction of braking distance.);
  • Service to customers: grant full “customer delight” with the most qualitative and innovative services, offer “the future” to today’s customers;
  • Raw materials eco and safety innovation: research & innovation commitment to identify new materials that, compared to traditional ones, are impacting less on the environment while increasing safety during product manufacturing, use and disposal;
  • Circular economy/end of life tyres (ELT): commitment to responsibly manage resources and end of life tyres with the aim of maximising a safe reuse and recycling;
  • Disclosure and transparency: company transparency in reporting economic, social and environmental performances, goals and challenges;
  • Business integrity: company compliance with local and international laws, regulations, universal principles of fairness, morality and justice;
  • Responsible use of natural resources: commitment to protect biodiversity and natural capital along the product life cycle, reducing water withdrawal, energy consumption, air and water emissions and increasing waste recovery;
  • Road safety: commitment to spread road safety culture through training, awareness-raising campaigns and innovative technological solutions for sustainable mobility;
  • Employment governance and responsibility: commitment to safeguard and continuously improve workplace environment, with a strong focus on health and safety, employees’ welfare & work-life balance, training & development, engagement and adequate remuneration, ensuring equal opportunities in the workplace while exploiting diversity as a business asset;
  • Future mobility: company capability to setting a long-term vision, anticipating market expectations and adapting its business model to contribute to sustainable mobility evolution;
  • Stakeholder dialogue: engage in a pro-active dialogue with company Stakeholders,  from employees to communities, clients, end-consumers, suppliers, institutions and non-governmental organizations, to integrate their expectations into Company development Strategy;
  • Financial health: ensure economic and financial stability in the medium-long term;
  • Corporate governance: ensure a solid, sound governance aligned with international best practices;
  • Sustainable procurement: align group supply chain to Pirelli's social, economic and environmental responsibility expectations, with a partnership approach aimed at creating shared innovation and value.

The priorities expressed by Pirelli and stakeholders have been represented in a materiality matrix setting out, on the vertical axis, the expectations of several external and internal stakeholders, while on the horizontal one, the importance that the Management attributes to individual business success factors. The result of such consolidation was presented and approved at the Sustainability Steering Committee held in January 2017 and is outlined below.

The position of the various sustainability elements inside the matrix is ​​due to the greater or less priority recognized to the above mentioned pre-selected ESG issues. It shall be underlined that all the ESG issues pre-identified through the aforementioned analysis are relevant for the development of Pirelli, thus  addressed and managed in accordance with best international practices.
It is right and appropriate to underline the fact that consolidation of the materiality matrix at Group level tends, by its very nature, to vary strongly from the materiality matrixes at country level. Sustainability elements located in an area of low materiality in the consolidated Group matrix may be highly material for a number of Countries or specific stakeholders who are more directly affected.

Just like the Plan targets set by the Company take into account the expectations expressed by stakeholders involved in the definition of the previous sustainability matrix, the revision of the matrix carried out in 2016 will be functional to the preparation of the next Group Industrial & Sustainability Plan, in addition to having already had an impact on refining the current 2020 targets.


Last Revised: 15 June 2017